Cryptocurrencies are making a comeback! Bitcoin has rebounded by 160% this year, and the market eagerly anticipates the impact of the demand for spot ETFs.

After experiencing a $1.5 trillion crash, the pessimistic sentiment that engulfed the cryptocurrency market at the end of 2022 has been replaced by a completely different emotion: greed.

According to Zhitong App, Bitcoin has made a comeback this year with a surge of over 160%, increasing its market value by approximately $530 billion. As investors embrace risk once again, small tokens like Solana and Dogecoin have taken off. If investors had purchased $100,000 worth of Solana at the beginning of 2023, they would now have made over $800,000 in profits.

The main driving force behind this upward trend is the optimistic belief that US regulatory agencies will soon approve the first-ever physically-backed Bitcoin exchange-traded fund (ETF). Investors will know whether this bet will succeed or not by January 10th next year.

Michael Saylor, co-founder of MicroStrategy (MSTR.US), stated, "The approval of a physically-backed ETF will be a major catalyst that will undoubtedly drive demand," as mainstream investors currently lack compliant channels for token investments. It is worth noting that this enterprise software company has made purchasing Bitcoin a part of its dual corporate strategy, making it the publicly traded company with the most digital assets. As of November 30th, MicroStrategy holds approximately $6.5 billion worth of Bitcoin.

There are still many critics of the digital asset market who believe that cryptocurrencies are fundamentally worthless and serve as a safe haven for criminals. The largest exchange, Binance, agreed to pay a $4.3 billion fine for a series of regulatory violations in November. Bankman-Fried, once hailed as the "king of cryptocurrencies," was convicted of fraud in the FTX bankruptcy case, which the US prosecutors called one of the largest financial fraud cases in American history.

The performance of major cryptocurrencies in 2023 is as follows:

Bitcoin has outperformed stocks and gold this year. Supporters argue that the quadrennial halving event set to occur in 2024 will curb supply growth and provide support for Bitcoin, as well as potential ETF demand. The trading price of Bitcoin is still far below the record high of nearly $69,000 set in November 2021.

Bitcoin has outperformed global stock indices and gold in 2023

With the recovery of the cryptocurrency market, the stock prices of MicroStrategy, Bitcoin miner Marathon Digital (MARA.US), Riot Platforms (RIOT.US), and top US cryptocurrency exchange Coinbase (COIN.US) have all seen increases. Coinbase's stock has surged nearly 400% despite being accused by the U.S. Securities and Exchange Commission of operating an unregistered platform. However, Coinbase denies these allegations.

This year, stocks related to cryptocurrencies such as Marathon Digital and Coinbase have skyrocketed.

Bitcoin derivatives have seen a significant increase in 2023. According to CCData, in December, the open interest of bitcoin options on the largest crypto options exchange, Deribit, exceeded $16 billion for the first time. The open interest of bitcoin futures on the Chicago Mercantile Exchange (CME) also reached a milestone level.

Demand for bitcoin options has reached unprecedented levels.

According to data from Nansen, the weekly trading volume of non-fungible tokens (NFTs) has increased from less than $50 million in October to around $180 million this month. However, this is still far below the peak of $1.8 billion in 2022.

NFT trading volume has rebounded but still represents only a small fraction of the previous peak.

Although the price of Bitcoin has surged, the negative impact of the FTX platform's collapse in November 2022 still lingers. This collapse led to a decrease in liquidity, making it more difficult to trade tokens.

Market depth, which refers to the ability of the crypto market to handle relatively large orders without significantly affecting prices, illustrates this issue. According to data from Kaiko, the daily trading volume of Bitcoin with a price fluctuation of less than 1% on centralized exchanges has decreased by 55% from around $1.5 billion in April last year to around $680 million.

Since the collapse of FTX, the trading volume of Bitcoin with a price fluctuation of less than 1% has decreased.

There have been significant changes in the market share of cryptocurrency exchanges this year. According to data from Kaiko, Binance remains the largest trading platform, but its spot trading share has dropped from over 65% in early 2023 to around 44% in mid-December. Platforms such as Upbit, Bybit, and OKX, which focus on Asia, have filled the void left by Binance's lost business.