Several significant catalysts have affected Bitcoin’s price throughout the year. This includes:
The collapse of Silicon Valley Bank
The collapse of Silicon Valley Bank (SVB) stands out as a pivotal event that brought crypto back into the spotlight after the 2022 bear market. SVB, ranked the 18th largest bank in the US, has been plunged into turmoil following a sell-off in US Treasuries, which has led to significant unrealized losses within the banking sector. This incident illustrated the risks inherent in the fractional reserve banking system, where customer deposits are loaned to borrowers, leaving only a fraction available for withdrawal.
The situation worsened further when SVB announced a significant loss on its US Treasury and government bond holdings, leading to a sharp drop in customer confidence. A classic bank run ensued, with depositors withdrawing $US42 billion in a single day before it collapsed. US regulators have stepped in to manage the crisis, but many customers’ faith in regulated banks has been shaken.
The bank failure also highlighted the critical benefit of decentralized currencies. The benefits of Bitcoin’s decentralized setup and its ability to self-storage funds became the story that helped propel the price of BTC to over $US30,000 in April, and carried through 2023.
SEC matches against Binance and Coinbase
However, not all events this year have been positive for Bitcoin’s price. The US Securities and Exchange Commission (SEC) lawsuits against Binance and Coinbase, for example, weighed heavily on the price of BTC and contributed to periodic slumps.
In June 2023, the SEC accused Binance and Coinbase of offering unregistered securities to the public, among other things. These legal actions have come amid ongoing debates over the classification of cryptocurrencies – whether they are securities, commodities or something else. The suits specifically targeted 19 tokens, including major players like Solana (SOL), Cardano (ADA), and Polygon (MATIC), casting uncertainty over their status.
The crypto market plummeted as a result with many coins experiencing double-digit declines in value the following week. This was not entirely unexpected, as the SEC had previously issued a Wells notice to Coinbase, indicating possible enforcement action. Binance, on the other hand, has been under the SEC’s scrutiny for years, particularly over its BNB token and the BUSD stablecoin.
In November, Binance pleaded guilty to a criminal charge and agreed to $US4.3 billion in fines to resolve a long-running Justice Department investigation. Binance’s founder and CEO Changpeng Zhao also pleaded guilty to violating criminal US anti-money laundering rules and agreed to resign.
This case is unrelated to the SEC investigation. The SEC has indicated that it intends to use Binance’s guilty plea as further evidence for its own case.
Although these lawsuits do not directly affect Bitcoin, which recovered quickly after the initial announcement, the fact that the two largest crypto exchanges are being sued by the SEC undeniably dampened investor sentiment during 2023.
BlackRock dives into Crypto
In June, shortly after the SEC lawsuits against Coinbase and Binance, investment firm BlackRock’s iShares unit filed paperwork with the US Securities and Exchange Commission (SEC) to form the iShares Bitcoin Trust for a mock Bitcoin ETF. The proposed ETF was a notable step, especially considering the SEC’s history of rejecting other mock Bitcoin ETF applications from companies such as Grayscale, VanEck and WisdomTree.
BlackRock’s stature and influence in the financial world, along with CEO Larry Fink’s political bent, cast this filing in a different light compared to previous efforts by other firms. The mock Bitcoin ETF filing gained attention not only for its potential to provide a regulated investment vehicle for Bitcoin, but also for the market integrity and transparency standards it promised.
The announcement was also a breath of fresh air for the crypto industry, which at the time was suffering from the regulatory crackdowns. BTC saw a noticeable boost in value following the news, with the price of Bitcoin rising to just shy of $US26,000.
This positive trend was reinforced in October when the proposed ticker for BlackRock’s spot Bitcoin ETF on the Depository Trust & Clearing Corp. (DTCC) website appeared. Although the inclusion of the ticker does not indicate imminent regulatory approval, its presence has been interpreted by crypto traders as a sign of progress.
The market reacted quickly, with Bitcoin’s price rising to $US35,000 shortly after the news.
Disclaimer for Uncirculars, with a Touch of Personality:
While we love diving into the exciting world of crypto here at Uncirculars, remember that this post, and all our content, is purely for your information and exploration. Think of it as your crypto compass, pointing you in the right direction to do your own research and make informed decisions.
No legal, tax, investment, or financial advice should be inferred from these pixels. We’re not fortune tellers or stockbrokers, just passionate crypto enthusiasts sharing our knowledge.
And just like that rollercoaster ride in your favorite DeFi protocol, past performance isn’t a guarantee of future thrills. The value of crypto assets can be as unpredictable as a moon landing, so buckle up and do your due diligence before taking the plunge.
Ultimately, any crypto adventure you embark on is yours alone. We’re just happy to be your crypto companion, cheering you on from the sidelines (and maybe sharing some snacks along the way). So research, explore, and remember, with a little knowledge and a lot of curiosity, you can navigate the crypto cosmos like a pro!
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