Bitcoin and Ethereum posted triple and double digit gains respectively as 2023 set the stage for the decentralization of capital and the control over one’s assets.
Notable Price Performance
The world’s first decentralized cryptocurrency, Bitcoin, has posted a 119.28% gain YTD on the back of economic uncertainty. Ethereum, the world’s first decentralized application platform (DApp), has posted a 67.36% gain YTD as the platform noted a record number of applications this year.
The two market leading cryptocurrencies currently account for more than 77% of the entire market capitalization of all cryptocurrencies. The shift towards the big two is likely due to market participants placing their bets on the two largest and best funded cryptocurrency ecosystems. Adequate funding leads to development and development leads to a growth in use cases which is needed for mass adoption.
Decentralization of Capital
In addition, Bitcoin and Ethereum have been beneficiaries of the development of Central Bank Digital Currencies (CBDC). Wide market participants, not just those involved in cryptocurrencies, believe that centralized digital currencies will bring privacy and control issues over one’s spending habits. To go further, they believe that if central banks are developing digital currencies, that must also mean that major cryptocurrencies like Bitcoin and Ethereum are somewhat of a good idea (with the bonus of decentralization).
However, most other cryptocurrencies have struggled significantly (in terms of price performance) in 2023. This leads us to believe that there might be a consolidation occurring in cryptocurrency markets towards Bitcoin and Ethereum which could lead to further funding for the Bitcoin and Ethereum foundations. The stage is certainly set for 2024 as any progress on CBDC’s could lead to upward price momentum for the big two cryptocurrencies.