2023 has been an incredible year for digital assets, with Bitcoin up over 172%, correcting less than 20%, and net capital inflows into BTC, ETH and Stablecoins.

This highlights a rising Bitcoin dominance, which is often seen as the market recovers from protracted bear markets, such as 2021-22. Ethereum in particular has had a somewhat slow start on a relative basis, with the ETH/BTC Ratio declining to multi-year lows at around 0.052, despite a successful shipping of the Shanghai update, and growth of its L2 ecosystem.

Whilst digital assets have significantly out-performed traditional assets like Equities, Bonds, and Precious Metals all year, the rally since late in October has been responsible for the lions share of the gains. This started with a break above the psychologically important price level of $30k, as well as numerous important pricing levels.

The rise in small account balances demonstrates broad participation from mainstream retail investors (0.1 BTC-0.01 BTC). Long-term holders have taken advantage of dips in the market to expand their positions. All told, this reflects renewed confidence on the part of long-time believers, at the same time as many are acquiring BTC for the first time.

2024 is poised to be a breakout year for Bitcoin. The most prominent near-term development is the likely approval of the first Bitcoin ETF, which promises a major wave of new investment. Other exciting developments include BitVM, a means to “compute anything on Bitcoin,” which proposes a new way to process smart contracts, improving functionality and allowing more complex transactions.