Dispatch #172: The Stories That Shaped 2023

Dec 29, 2023 6 min read

Dispatch

In this patch of your holiday Dispatch:

Bitcoin’s run in 2023 🥇
The one and only ChatGPT 🤖
Crypto adoption across the globe 🌐

No end-of-year review is complete without a list of the most founding events. It’s been a year marked by positive and transformative developments and we bring you the five stories 2023 will be remembered for.

These key events have not only defined the past 12 months but are poised to remain relevant as narratives in 2024. From groundbreaking tech advancements to regulatory milestones, these pivotal moments have solidified the crypto industry's position as a force to be reckoned with.

Number Five: Shapella Update Enables Staked ETH Withdrawals

2023

Ethereum marked 2023 with an upgrade of profound effect that went so smoothly, it could’ve gone unnoticed amidst Bitcoin’s increasing dominance. The successful Shapella upgrade has enabled investors with staked ETH to unstake and withdraw, yet Ethereum’s total-value-locked (TVL) managed to reach almost $30B. ETH’s price upswing was undoubtedly boosted by a number of futures ETF applications from VanEck, ProShares, and Bitwise. We haven’t heard the last word on those and with another huge upgrade scheduled for 2024, ETH appears positioned to carry the momentum into 2024.

2024

ETH stands at the forefront of transformative trends in digital finance, particularly in real-world asset (RWA) tokenization, where its distributed ledger technology has gained significant traction. Home to $2B worth of RWAs, it played a crucial role in the issuance of a €10M digital bond from Société Générale. Expectations are for this trend to continue in 2024, enhancing Ethereum as an attractive venue for institutions engaging in pilot studies.
In Q1 2024, Ethereum is set for the “Dencun” upgrade. Focused on enhancing data storage capacity through “proto-danksharding”, it aims to reduce fees for Layer 2 rollups and scale the blockchain.
With so much going on currently in one of the fundamental layers of crypto and a series of promising developments scheduled in the near future, keeping a close eye on Ethereum next year is high on our list.

Number Four: The Evolution of AI

2023

We are sliding a little confession here – if there was one thing we couldn’t imagine 2023 without, ON TOP OF CRYPTO, it has to be ChatGPT. Its effects are bound to be lasting with countless developments in these early phases of its adoption. And early or not, ChatGPT parent OpenAI has the overwhelming lead in this innovation after a founding year: 110M mobile app installs (almost $30M in revenue), a $300M share sale (and $27B valuation), and a real-time news partnership.

2024

In 2024, the introduction of GPT-4 Turbo will enable a larger context window, supporting up to 128,000 tokens for improved response accuracy.
GPT-4 Turbo will also venture into the visual realm, accurately interpreting images and generating them through DALL·E 3.
GPT Builder will introduce natural language application creation, while GPTs Store acts as Open AI's application, allowing developers to share custom AI agents and models, marking a significant evolution in ChatGPT's functionality and versatility.

Number Three: Bitcoin's 2023 Run

2023

It’s been difficult to focus on anything else in crypto with Bitcoin dominating the space on its seeming way to a new all-time high. BTC’s performance in 2023 could serve as a prime example of a bonafide market rally with all the different phases of hype, accumulation, and corrections, all at a rate of price appreciation that we know only BTC is capable of. In a nutshell, it was caused by the twists and turns of the competition between the world’s top asset managers to establish US-based spot Bitcoin ETFs. The lengthy application process with the SEC has secured a constant stream of news that markets fed on to speculate.

But it wasn’t just that, as Bitcoin adoption flourished all over the globe: small investors found the prices favorable to accumulate and hold the asset, traders employed more complex strategies, investment companies experienced inflows in their Bitcoin-related ETPs, while major local banks showed interest in exposure to the asset.

2024

With so much momentum carried forward in 2024, it could be a year that starts with a lot of expectations, particularly towards BTC.
The spot Bitcoin ETF drama appears ever so close to finality, while at the same time, Bitcoin’s Halving imminently approaches. Initially in 2024, it will be these two developments that drive Bitcoin’s performance.
Beyond that, the network’s currently explored ability to provide more efficient layer 2, BTC-native solutions should clear out whether the world’s premier blockchain could provide an alternative to Ethereum’s modality.

Number Two: Global Cryptocurrency Adoption Trends

2023

In 2023, the landscape of cryptocurrency adoption witnessed significant shifts, with India emerging as a global leader in grassroots adoption and surpassing Nigeria and Vietnam, according to Chainalysis' 2023 Global Crypto Adoption Index. The Central and Southern Asia and Oceania (CSAO) region dominated the top rankings, emphasizing the influence of Asian countries in driving crypto adoption. Despite a challenging market, institutional adoption in high-income countries showed resilience. India's proactive role in crypto discussions during the G20 summit underscored the need for a global consensus on crypto policies, rejecting a blanket ban and emphasizing technology's borderless nature.

2024

The anticipation of the Bitcoin Halving in April 2024 sets the stage for a potential market surge, with Standard Chartered Bank (and our Co-founder Antoni) projecting Bitcoin to reach $100,000 by 2025, buoyed by the expected approval of US-based spot Bitcoin ETFs.
Simultaneously, crypto payments gain ground across various sectors, driven by technological advancements and increasing confidence in blockchain security, as demonstrated in Latin America.
Regulatory clarity, foreseen in 2024, instills confidence in institutional investors, aligning with Europe's proactive regulatory measures in 2023.
Furthermore, the tokenization of real-world assets gains momentum, offering increased accessibility through fractional ownership.

Number One: Ripple’s Win Against the SEC

2023

The crypto world witnessed a landmark decision on July 13, 2023, when the U.S. District Court for the Southern District of New York reshaped the industry's landscape. In a split decision, Judge Analisa Torres challenged the SEC's stance on tokens, stating that XRP is not inherently a security. The court evaluated various XRP transactions, determining that three out of four did not involve securities. The decision holds significant implications, questioning the SEC's approach to digital assets and providing a nuanced perspective on token classification – a longstanding goal for the industry.

2024

Going forward, the crypto industry is poised for continued legal and regulatory developments in the aftermath of the Ripple case. The decision is expected to at least prompt the agency to adapt its enforcement strategies, potentially strengthening evidence related to establishing clearer connections between secondary market purchases and promotional efforts.
Another notable development involves the CFTC's assertion that the majority of cryptocurrencies should be classified as commodities, sparking a regulatory “turf war” with the SEC. This trend underscores the imperative for regulatory clarity to ensure investor protection and foster widespread crypto adoption. The resolution may become a key trend in the evolving crypto regulatory landscape.

The Most Interesting Data Story in 2023

Here’s how 2023 has been based on a YtD crypto chart. A flourishing crypto market, marked by Bitcoin's impressive 172% surge and minimal correction; strong net capital inflows; and breakthroughs in technical models. Top that with a pivotal October for institutional capital, and the optimism of long-term holders with a near all-time-high of Bitcoin supply and a super-majority of coins in profitable positions.