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One year has brought about significant changes. This is how our January 2023 letter began:
Dear Investors:
Imagine it's January 1, 2022. Now, picture me telling you that by January 17, 2023, Tesla will have fallen by 63%, Meta by 60%, Amazon by 42%, PayPal by 57%, and Square by 54%. For U.S. bond investors, this is the worst year ever. Edward McQuarrie, a professor emeritus at Santa Clara University who analyzed historical investment returns, stated, "Even going back 250 years, you can't find a worse year than 2022."
Now, guess how much Bitcoin would fall. I believe most would say more than 54%...
In the face of a dismal macro market for risky assets and historic special disasters, the resilience of blockchain is impressive.
Blockchain will change the world. It will surely survive these challenges.
It has—impressively.
Last year, Bitcoin's price fell in sync with these tech companies. This year, its performance has far exceeded most companies.
This has been Bitcoin's story for 14 years—each cycle with greater lows and higher highs.
Opponents and contrary politicians are too good at singing a different tune. It's important to take a step back and appreciate the significant progress the blockchain industry has made in 2023.
In 2022, the dominoes fell ruthlessly—one after another, leading to a series of merciless failures. This year, we expect to see the last few pieces of the terrible dominoes fall. Binance is the largest remaining piece, and we will discuss it later in this letter.
The interlocking dominoes seem to have completed the final link. We are very optimistic because most of the significant events in 2023 have been good news, and the blockchain industry has made meaningful and necessary progress.
Some key points:
- Institutional adoption is accelerating. The headline news is that traditional financial giants like BlackRock and Fidelity, as well as leading companies in the blockchain ETF field sponsored by Bitwise, are about to approve a spot Bitcoin ETF. Similar to the first international gold ETF in 2003 and the first U.S. gold ETF in 2004, this opens a new channel for traditional capital to flow into "digital gold," which may not have participated before.
- We can trust the fairness of the U.S. court system, which makes us confident. The native token XRP of Ripple was ruled as a non-security, and Grayscale won a lawsuit against the U.S. Securities and Exchange Commission (SEC) regarding its Bitcoin ETF application—these all indicate that the U.S. can create a favorable regulatory environment for blockchain, further promoting domestic innovation.
- The moment when blockchain goes from "dial-up" to "broadband" is coming. We can see this from the growth of Ethereum Layer 2 and large-scale blockchains—Arbitrum has accounted for nearly 100% of the transaction growth in the Ethereum ecosystem this year.
- The market has rebounded since the beginning of this year. The yearly low for Bitcoin was $16,680 on January 2. The overall market capitalization of cryptocurrencies has doubled, increasing from $0.8 trillion to $1.6 trillion.
We will delve into some of these issues in this letter. First, here's a visual retrospective of some significant events in 2023:
Cryptocurrency Market Update
Author: Jeff Lewis, Hedge Fund Product Manager
Exactly a year ago, the European Central Bank issued this tweet that wasn't particularly prescient, calling for Bitcoin to spend its final moments before gradually becoming "irrelevant."
The language is ultimately decorative and exaggerated. |
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Post time 22-12-2023 21:18:05