A Visual Look Back on Bitcoin in 2023
Crypto Basics

A Visual Look Back on Bitcoin in 2023

Created 4mo ago, last updated 4mo ago

A look back at the major Bitcoin events, trends, and metrics that shaped the cryptocurrency in the year 2023.

A Visual Look Back on Bitcoin in 2023

Table of Contents

Bitcoin Key Events of 2023

Source: https://coinmarketcap.com/currencies/bitcoin/

In 2023, Bitcoin (BTC) gained over 160% after a brutal bear market. In the first quarter, it recovered from the lows of $16,000 post-FTX crash to $24,800. However, volatility continued when crypto-friendly financial institutions like Silicon Valley Bank and Silvergate Capital faced liquidity issues. This briefly caused Bitcoin to fall back to the $20,000 level before swiftly rebounding.

The big news came in June when BlackRock, the world's largest asset manager, filed for a spot Bitcoin exchange-traded fund (ETF). While the SEC had rejected previous spot ETF applications, BlackRock's scale and influence renewed optimism.

By October, Bitcoin rallied above the $40,000 level for the first time since April 2022. While the regulatory landscape remains uncertain, the market is eagerly awaiting the approval of a spot Bitcoin ETF, which could potentially bring a new wave of institutional investors into the cryptocurrency industry.

Bitcoin Dominance Increases

Source: https://coinmarketcap.com/charts/

In 2023, Bitcoin's dominance in the crypto market has been on the rise. As the largest cryptocurrency by market capitalization, Bitcoin's performance often sets the tone for the overall market. As the market recovered this year, it led the charge with altcoins following in its wake. As a result, Bitcoin's dominance increased significantly, from around 40% at the beginning of the year to over 52% at the time of writing. This means that Bitcoin's market capitalization is now more than half of the total market capitalization of all other altcoins combined.

This trend is typical of market cycles where Bitcoin rallies first before an "altcoin season" emerges. Investors often rotate their funds from Bitcoin into altcoins in search of high returns. However, during periods of uncertainty or market downturns, funds generally flow back into Bitcoin as a perceived safe haven. The increased Bitcoin dominance is also a result of renewed optimism over spot Bitcoin ETF.

Bitcoin Volatility Hits All-Time Low in August

Source: https://www.coinglass.com/pro/i/bl

In August 2023, Bitcoin's 30-day annualized price volatility hit an all-time low, reflecting a significant decrease since March 2023. This low volatility coincides with slumping trading volume, as Bitcoin ranged around $29,000 for weeks.

The low volatility and narrower daily price fluctuations could be seen as preceding a rapid market movement, as observed in previous market cycles. This was reflected in the rapid decline of BTC to $25,000, before a major price expansion in October to the $45,000 level.

Bitcoin Addresses

Source: https://studio.glassnode.com/dashboards/btc-addresses

In 2023, the number of Bitcoin addresses with a non-zero balance has continued to increase consistently, indicating ongoing adoption and usage growth. This metric has been growing steadily since its inception, demonstrating the increasing number of users holding Bitcoin.

Furthermore, the trend of new Bitcoin addresses created daily has reached highs not seen since February 2021, with significant spikes in September and November this year. This suggests that there is a healthy growth in the number of daily active users engaging with the Bitcoin network, due to users accumulating BTC or using the network for applications like Bitcoin Ordinals.

Bitcoin Mining Revenue

Source: www.theblock.co/data/on-chain-metrics/bitcoin/bitcoin-miner-revenue-daily

Bitcoin miners' revenue has seen a steady increase throughout 2023, with a significant spike in November. This recent surge in revenue is primarily attributed to a rise in transaction fees, which is directly linked to the Bitcoin Ordinals inscription frenzy.

Ordinal Inscriptions are digital assets inscribed on a satoshi, the smallest unit of Bitcoin. Similar to NFTs, Ordinals allow users to inscribe data, such as images, text or videos, onto the Bitcoin blockchain. The process of inscribing an Ordinal requires a transaction, which in turn generates a transaction fee for miners.

The popularity of Ordinal Inscriptions has led to a surge in on-chain activity and a subsequent increase in transaction fees. These trends catalyzed two distinct spikes in Bitcoin miners revenue - one in May and the other in November - coinciding with the periods of heightened Ordinals activity.

Bitcoin Mining Stocks Outperform BTC

Source: TradingView

Bitcoin mining stocks have mounted an impressive recovery in 2023, outperforming Bitcoin itself. Leading mining companies such as Bitfarms Ltd. ($BITF), Marathon Digital Holdings ($MARA), Bit Digital ($BTBT), CleanSpark Inc. ($CLSK), and Iris Energy ($IREN) have witnessed remarkable gains, ranging from 380% to 580%. This outperformance is particularly noteworthy considering Bitcoin's already impressive 155% surge this year.

Several factors drove mining stocks' outsized returns. First, anticipation of Bitcoin's upcoming halving event in April 2024, which will cut block rewards by 50%, boosted investor sentiment. Historically, halvings catalyze bull runs as reduced new supply amid steady demand lifts prices.

Secondly, the recent increase in Bitcoin mining revenue due to the Ordinals inscription trend has provided a boost to mining companies.

Bitcoin Ordinal Inscriptions

Source: https://dune.com/dgtl_assets/bitcoin-ordinals-analysis

Bitcoin inscriptions, also known as Ordinals, have emerged as a major trend in the Bitcoin network in 2023. Introduced in January by programmer and artist Casey Rodarmor, Ordinals bring NFT-like functionality to the Bitcoin network, allowing users to inscribe data, such as images, text or videos, onto satoshis, the smallest unit of Bitcoin.

The Ordinals protocol has sparked a surge in native Bitcoin NFT collections and memecoins, as users rush to mint and trade these digital assets. The number of inscriptions saw significant spikes in May and October this year, driven by the excitement and speculation surrounding Ordinals.

However, the popularity of Ordinals has also raised concerns among some members of the Bitcoin community. The hype of inscribing and trading them has led to increased transaction fees on the network. Some critics, such as Bitcoin Core developer Luke Dashjr, argue that Ordinals are exploiting a vulnerability in Bitcoin Core to spam the blockchain.

Source: www.theblock.co/data/nft-non-fungible-tokens/nft-overview/nft-trade-volume-by-chain

Despite criticism from some in the Bitcoin community, Bitcoin NFTs, also known as Ordinals, have witnessed a surge in trading volume in 2023, surpassing that of Ethereum since November, which has traditionally dominated the NFT market.

According to data from Cryptoslam, Bitcoin NFT sales volume has already surpassed $1.5 billion in 2023, despite Ordinals only being introduced in January. While this figure is still significantly lower than Ethereum's all-time sales volume of nearly $42 billion, it represents a remarkable achievement for Bitcoin NFTs in such a short period of time.

It remains to be seen whether the popularity of Bitcoin NFTs will continue in the long term. However, the strong start to 2023 suggests that Ordinals might continue to grow beyond the initial hype and attract a new wave of users to the Bitcoin network.

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