Dispatch #171: The Stories You Loved Аbout 2023

In this patch of your holiday Dispatch:

• The Asian lead on crypto 🌏
• The Ethereum birthday 🎂
• The NFTs on Bitcoin 🔗

The festive season is about to kick off after a burgeoning year for crypto. And there is no denying that it has been a fruitful one all around – the crypto sector’s market cap has more than doubled in 2023 from around $830B at the start of the year to $1.7T. 🔥

So, all's well that ends well.

Naturally, we extensively covered the price movements and the whirlwind of crypto news on Dispatch, but this year, we wanted to put special emphasis on what you – our loyal readers – found the most intriguing.

This is why we dedicated the first of the last two Dispatch editions for 2023 to our readers who – based on your engagement with our newsletter – nailed what’s been most important this year.

Without further ado, enjoy the Top Five Crypto Stories You Loved in 2023:

Number Five: Is the Next Bull Run Starting in Asia?

Then

The expansion of cryptocurrencies in Asia was a huge topic in February – a trend that our dedicated audience could not have gone amiss. What was the inspiration? A proposal from Hong Kong's securities regulator to develop guidelines for virtual asset platforms signaled the possibility of regulated crypto trading for retail investors. The news immediately saw Bitcoin perform a signature, 25%-up-in-a-week move to $25,000, but to what extent did Asia support this rally?

Now

• Asia's influence in the cryptocurrency market is notable, as the region has been milder in regulating compared to the US, with South Korea and Japan more hospitable towards crypto.
• The Korean won has become the main sovereign currency for trading against crypto tokens, accounting for 41% of the market and overtaking the U.S. dollar.
• Retail volumes in Asia, particularly in South Korea, are becoming increasingly important, with retail flow considered the lifeblood of the crypto markets.

Number Four: 9 Years of Ethereum

Then

At Dispatch we are hardly going to miss an important date in crypto. And when it’s Ethereum’s birthday – a fundamental crypto network with built-in utilities thanks to which we have L2s and dApps – it becomes a must.Picture this: January 23, 2014, a date not etched in everyone's memory. That day, a 19-year-old whiz kid named Vitalik Buterin jumped onto the BitcoinTalk forum, posted a message titled “Welcome to the New Beginning,” and tipped his hat to Bitcoin as the cool 'grand experiment.' Its pros? Trustless, decentralized, no middlemen needed. Cons? It lacked a Turing-complete scripting language. And just like that, the seeds for Ethereum were sown.But where does ETH stand, nigh on its round anniversary?

Now

• Some will rightfully point out that ETH has taken a backseat in the recent crypto market rally dominated by BTC, yet leading banks anticipate bullish moves for ETH in 2024.
• Key catalysts for Ethereum include the potential approval of a spot ETH exchange-traded fund and the upcoming Dencun upgrade in March or April, promising scaling improvements and lower layer-2 gas costs.
• The surge in Layer-2 activity, reaching an all-time high, and the launch of non-EVM layer-2s have contributed to Ethereum's growth. Additionally, advancements in wallet user experience and the increasing trend of real-world asset tokenization are enhancing Ethereum's appeal to us and the whole wide world.

Number Three: BTC Erases Post-FTX Losses

Then

It took BTC only a few weeks into 2023 to mostly erase its price downfall following the FTX collapse, spiking from $16,000 to over $20,000 in roughly 10 days. The Big Idea at the time? Apparently, it was risk-on in markets, as the first signs of global inflation receding came up, while crypto experienced a mid-crypto winter heater up in price. That January rally delivered a breath of fresh air in crypto markets, but who could’ve known it was to be repeated more than once throughout the year?

Now

• Bitcoin battled fiercely to reclaim key psychological levels between $25,000 and its YtD top of $44,000, mostly fuelled by chatter on the potential approval of a spot Bitcoin ETF that dominates the space. That resulted in investors of all sizes (from shrimp to whale) engaging in heavy spot Bitcoin buying.
• Trading volumes picked up significantly throughout the year with Options open interest surpassing the Futures markets for the first time to signal the maturation of BTC traders, while investors displayed impressive dedication to hold the asset.
• Bitcoin’s fruitful year has also been supported by a surge in network activity, following the Taproot Assets protocol which enables the creation of stablecoins and assets on both Bitcoin and Lightning. P.S. Read Nexo Co-founder Antoni Trenchev’s Taproot commentary in a recent Bitcoin Magazine article.

Number Two: Is the US’ Crypto Loss the World’s Crypto Gain?

Then

Last year saw US authorities take a firm stance on cryptocurrencies, which prompted digital asset companies to relocate to other jurisdictions. Apart from buzzing Asia, it put the EU on the crypto map, which we covered in April’s Dispatch #121. Reassuringly, it’s a Big Idea that you’ve diligently shown great interest in. Mind you, it all stemmed from the EU's Markets in Crypto-Assets (MiCA) vote-in – legislation aiming to establish a framework for the issuance and provision of services related to crypto-assets. It’s still an ongoing process for the Old Continent’s bloc, as MiCa entered into force in June 2023, but what’s been clarified since then?

Now

• MiCA will require cryptocurrency firms, such as exchanges and wallet providers to obtain licenses for operations within the EU, while stablecoin issuers must maintain appropriate reserves. Nexo’s efforts in this regard saw our company gain licensing from EU authorities in Italy, Poland, and Lithuania.
• While the newly approved legislation addresses key aspects of digital assets, it excludes non-fungible tokens (NFTs) and decentralized finance (DeFi), with expectations and speculation running high on how subsequent versions will address these areas.
• MiCA's influence could extend globally due to the "Brussels effect," where pioneering EU regulations, like those in online data protection, often set a global standard as multinational companies prefer to adopt a unified set of rules.

Number One: Bitcoin NFTs

Then

Back in February, Ordinal Inscriptions on the Bitcoin network sparked debate. Bitcoin Ordinals, introduced by Casey Rodarmor a month earlier, assign unique numbers to satoshis for tracking and transfer of digital assets. Essentially, they're akin to NFTs on the Bitcoin blockchain, where the Ordinal protocol allows for the enhancement of these ordinals with additional content, such as images or text. This innovative process enables the creation of unique digital assets, similar to NFTs, all within the framework of Bitcoin's blockchain. Seen as either innovative digital artifacts by some or as spam deserving criticism by others, they divided opinion at launch.

Now

Almost a year after the introduction of BRC-20 tokens, it seems Dispatch readers had laser-eye focus – Bitcoin Ordinals have surged to provide Bitcoin-native NFTs:

• BRC-20 tokens surpassed a $4B market cap since their inception, with the first BRC-20 memecoin, ORDI pushing a $1.34B market cap.
• Bitcoin miners' on-chain fee earnings rose from 1.7% in August to 19.57% by November, with daily mining revenue exceeding $40M. Despite high gas fees, there's strong community demand for minting BRC-20 tokens, as seen with the SATS memecoin.
• Researchers predict layer-two solutions like the Lightning Network will support broader Bitcoin payment adoption by 2024.

Your Most Interesting Data Story in 2023

Those wondering what all the fuss around Bitcoin Ordinal inscriptions is could find the chart below helpful. It illustrates the increasing share of those towards the total number of transactions on the Bitcoin network. Fees from inscriptions have already passed $50M and to little surprise as Bitcoin Ordinals frequently amount to more than 50% of all transactions on the Bitcoin network.

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What to Watch for Next Week:

• What were 2023’s most defining events in crypto?
• What will the year’s best-performing coins’ be?
• What will Dispatch bring in 2024?

As we bid farewell to another eventful year, it's remarkable to reflect on our journey. We've navigated through turbulent times, overcoming challenges and uncertainties with resilience and determination. Our collective efforts have not only strengthened the foundation of this dynamic industry but have also paved the way for groundbreaking innovations and wider acceptance.Thank you for being an integral part of our journey. Until our next update, stay curious, stay informed, and keep believing in limitless possibilities.