By Jake Coleman
Congratulations, the year 2023 has been an absolutely remarkable one for Bitcoin! It is as if Bitcoin made a sudden decision to demonstrate the extraordinary power it possesses. This is a tremendous leap, with a value increase of more than 140% – it is absolutely unbelievable! It is not only about outperforming traditional competitors such as gold; it is also about departing from other cryptocurrencies in a significant manner.
Let’s investigate the activity that is taking place on the blockchain and the excitement that is surrounding exchanges in an effort to discover some clues about the future of Bitcoin in the coming year.
An Explosion From the Past for Bitcoin
Based on the report by Glassnode, there are a number of striking parallels between the Bitcoin cycles that occurred between 2015 and 2017 and those that occurred between 2018 and 2022. These parallels can be seen in the length of time it takes for Bitcoin to recover and the amount of time it takes for its value to decrease from its all-time high (ATH).
A decrease of approximately 37% has occurred in the value of Bitcoin since it reached its all-time high (ATH) earlier this year. This fall is very comparable to the drop of -42% that occurred between 2013 and 2017 and the decline of -39% that occurred between 2017 and 2021, both of which were also observed. Furthermore, when compared to the return of 119% that occurred between the years 2015 and 2018 and the return of 128% that occurred between the years 2018 and 2022, the price increase of 140% that Bitcoin has experienced since the FTX lows in November 2022 is the most remarkable one-year return.
The Trading Paradox of Bitcoin With Regard to Exchange Activity
In an unexpected turn of events, the year 2023 has proven to be a remarkable period for Bitcoin. However, it is worth noting that the volume of transactions funneling funds into exchanges has reached its lowest point in several years. But here’s the twist: According to Glassnode data, the volume of transactions occurring on exchanges has experienced a significant surge, soaring from $930 million to an astonishing $3 billion. This represents a remarkable increase of 220%.
Given the decline in deposits, one would naturally question the rationale behind the recent uptick in exchange activity. It would be interesting to speculate on what could be causing this increase in trading volume if retail investors do not cause it. One possible interpretation of the decline in deposit-related transactions is that investors need to be more wary of leaving their assets on exchanges unattended.
This might be because they wish they had more say over their financial situation or because they are worried about their safety. Now, we need to consider the possibility of moving away from custodial platforms and toward alternatives like StealthEX.
The fact that these platforms offer the ability to store private keys securely is not surprising, given the continuing controversy surrounding FTX, which is still very much in people’s thoughts.
Indicative of a surge in trading and speculation activity, there has been a significant increase in the volume of transactions that take place on the blockchain. Investors are actively engaging in trading and transferring substantial amounts of money despite the fact that they may be reluctant to deposit their funds. This is an indication of an increasing level of interest from institutions, particularly when considering the fact that the average deposit size on exchanges is getting closer to the previous record high of $30,000 per deposit, as reported by Glassnode.
Furthermore, it is worth noting that the proportion of exchange deposits in relation to all transactions has significantly decreased from approximately 26% in May to a mere 10% at present. However, when considering the impact of Inscriptions, the decline appears to be more moderate, around 20%, which adds dimension to this story. Clearly, there is a noticeable transformation happening in the blockchain industry as innovative transaction methods surface and fresh participants gain attention.
Putting It All Together: Bitcoin and Going Beyond
So, there you go – Bitcoin’s 2023 narrative is a blend of successes, obstacles, and a plethora of enthusiasm. Bitcoin, in its digital realm, never ceases to captivate us with its unpredictable journey of impressive rebounds and downturns that echo past trends, even managing to bounce back recently despite a few obstacles along the way.
The interplay of various elements and the ever-changing dynamics of exchange activities weave together an intricate yet captivating story. No matter if you’re in it for the ups or downs or just out of pure curiosity, keeping an eye on Bitcoin’s journey is definitely worth it.
