Bitcoin Annual Report 2023: The currency price recovered by 158%, and the total mining revenue exceeded $9.8 billion

2023-12-25 08:56:31

By Carol, PANews

“Repair” and “rebirth” are the two key words of Bitcoin in 2023. On the one hand, in the context of the Fed’s continuous interest rate hikes, global fiscal policy tightening, and geopolitical tensions, Bitcoin has changed last year’s decline and entered a steady upward channel; on the other hand, under the rapid development of the Ordinals protocol, the BRC-20 inscription has exploded in the market, bringing new vitality to the Bitcoin ecology and the entire industry.

Behind this picture, what is the micro development of Bitcoin in 2023? What progress can be expected next year? PAData comprehensively reviewed the data changes of Bitcoin this year in the four major aspects of trading market, on-chain fundamentals, mining and applicability.

TLDR；

Marketplace

In 2023, Bitcoin will basically complete the repair of last year’s decline, and the price of the currency will rise to more than $42,000, an annual increase of 158.06%, and the annual upward trend is very clear and sustainable.
Historical data shows that production cuts usually coincide with currency price increases. Bitcoin will usher in its fourth production cut on April 19 next year and is expected to continue its upward trend next year.
87.76% of the chips are profitable, and the profitability of long-term holders is higher than that of short-term holders. The overall profitability of Bitcoin this year is much better than last year.
The price changes of Bitcoin this year have little statistical correlation with the Dow Jones Industrial Average and the U.S. Dollar Index. However, in some sessions, Bitcoin has a certain positive correlation with the Dow Jones Industrial Index and a certain negative correlation with the US dollar index. On-Chain Fundamentals
The average monthly active Address on the chain this year is about 948,700, a slight increase of 3.51% from last year.
This year, the asset distribution of general users of Bitcoin continued the trend of accelerating small-denomination, but the holding cycle tilted from long-term polarization to long-term. The number of Addresses with balances between 0.001 and 1 BTC accounts for 97.24% of the total number of Addresses. The percentage of chips in 2 to 3 years increased by 6.7 percentage points during the year.
The number of transactions and the total value of transactions are differentiated. This year, Bitcoin has accumulated more than 145 million on-chain transactions, an increase of about 63% over last year, and the total on-chain transactions for the year are about 47.4498 million BTC, down 2547% from last year.
The cumulative on-chain transaction fees of Bitcoin this year are about 641 million US dollars, a surge of 367.88% from last year. The average transaction fee this year is about $3.77, an increase of 146.41% from last year. *Mining
This year, the total annual revenue (transaction fees and mining rewards) of Bitcoin mining is about $9.849 billion. The average daily fee ratio surged to 19.26% in December.
This year, the mining difficulty has increased by 90.35%, and the average daily Computing Power of the entire network has increased by 106.27%. Computing Power has risen less than the currency price, which means that mining has the opportunity to obtain excess returns. *Application
More than 49.46 million Inions (inscriptions) have been produced throughout the year. There are two peaks in the growth of Inions throughout the year, the first peaking from late April to mid-September, and the second peaking from late October to the present.
BitcoinDecentralized Finance’s TVL increased from US$96 million to US$299 million, an increase of 211.46% during the year. The largest protocol, the Lighting Network’s TVL share, dropped to 70.95% from 87.90% at the beginning of the year. The diversified development of the Bitcoin ecosystem has begun to appear.

01 Trading Market: The annual currency price rose by more than 158%, and the profit chips accounted for more than 87%

The market is the most intuitive window to observe the development of Bitcoin. In 2023, Bitcoin will basically complete the repair of last year’s decline, and the price of the currency will rise from $16,500 at the beginning of the year to more than $42,700 at the end of the year, with an annual increase of 158.06%, which is close to the level of early 2022. Moreover, the upward trend of Bitcoin this year is very clear and sustainable, with more than 5% of the big rise and fall less, and the average value of the daily currency price change is only 0.29%, the highest is not more than 9.77%, and the lowest is not more than -7.83%.

Bitcoin will usher in the fourth production cut next year, and the production reduction is expected to be an important driving force for the currency price to rise. If we take the six months before and after the production reduction (180 days) as a cycle, then in the first half of the first three production cuts, Bitcoin rose by 134.62%, 51.30% and -1.89%, respectively; in the second half of the production reduction, Bitcoin rose by 955.74%, 37.24% and 72.21%, respectively. In the six cycles of the three production cuts, Bitcoin only fell half a year before the third production cut, which was the market winter, but the decline was still not large. Overall, historical data suggests that production cuts usually coincide with currency price increases.

According to BTC.com’s forecast, the fourth production cut is expected to occur on April 19, 2024. At present, Bitcoin has entered the cycle of the first half of the production cut (starting from October 22 this year), the currency price on that day was $29,900, and it is expected that next year’s production reduction will provide impetus for the currency price to rise.

However, although the trend of Bitcoin price recovery this year is very clear, the market volume has not risen in tandem. The average daily trading volume for the year was about US$18.92 billion, showing an overall downward trend during the year. Among them, the trading volume in the first quarter was the highest, with an average of about $33.4 billion, and the transaction volume rebounded in the fourth quarter, with an average of about $17.6 billion.

On the other hand, the futures market in Bitcoin this year continued to be active, and the total amount of outstanding Close Position continued to rise during the year, rise from US$6.379 billion at the beginning of the year to US$10.463 billion at the end of the year, an increase of 64.02%. However, on the contrary, the leverage ratio is decreasing. According to CryptoQuant, the estimated leverage in the Bitcoin futures market fell from 30.67% at the beginning of the year to 20.22% at the end of the year (as of December 21), which has fallen back to the level at the beginning of the year and is basically at the average of the last three years.

MVRV is the ratio of Market Cap to Realized Value, and if the value is greater than 1, it means that the current market price is higher than the “fair price” at the time of the chip trade, and the market price may be overvalued. Bitcoin’s MVRV has been greater than 1 since January 13 this year, rising to 1.96 at the end of the year, with an average of about 1.40 for the year. This shows that the market of Bitcoin has basically been overvalued this year.

MVRV greater than 1 also usually means that more chips are likely to be profitable. Glassnode’s data shows that the proportion of profitable chips in BTC in circulation increased from 50.77% at the beginning of the year to 87.76% at the end of the year (as of December 19), that is, the vast majority of chips are profitable. The current proportion of profit chips is higher than last year’s maximum, and the overall profitability of Bitcoin this year is much better than last year.

From the perspective of profit strategy, LTH-SOPR/STH-SOPR (long-term holders’ output profit ratio/short-term holders’ output profit ratio) rising from 0.61 at the beginning of the year to 2.1 at the end of the year, especially since late October, this ratio has almost always been above 1. The ratio is divided by 1, and a larger ratio indicates that long-term holders are more profitable than short-term holders. Overall, long-term holders are more profitable this year, and this advantage becomes more pronounced at the end of the year.

In terms of institutional funds, it is worth noting that the application news of Spot ETFs has had an impact on the Bitcoin trading market many times (related reading “Reading Bitcoin ETFs: 5 futures ETFs with total assets of nearly $1.3 billion, how much is Bitcoin affected by the application news?”). The frequent news of the application means that the connection between Bitcoin and the traditional financial market is deepening. However, according to statistics, the price changes of Bitcoin this year are basically not statistically correlated with the Dow Jones Industrial Index and the US Dollar Index in general. Among them, the number of days that Bitcoin is not related to the two (the 7-day average of the correlation coefficient is between -0.5 and 0.5) is 179 days and 200 days, accounting for 51.59% and 57.64% respectively.

However, in some sessions, Bitcoin has a certain correlation with the Dow Jones Industrial Index and the US Dollar Index, with a certain positive correlation with the former and a certain negative correlation with the latter. Specifically, Bitcoin had 54 days and 96 days of weak negative correlation (the 7-day mean of the correlation coefficient was between -0.5-0.8), accounting for 15.56% and 27.67%, respectively, and 114 days and 11 days of weak positive correlation (the 7-day mean of the correlation coefficient was between 0.5-0.8), accounting for 32.85% and 3.17%, respectively. There were 40 days of strong negative correlation with the U.S. dollar index (the 7-day average of the correlation coefficient was above -0.8), accounting for 11.53%. Moreover, in terms of trends, the correlation coefficient with the Dow Jones Industrial Index in Bitcoin is on a downward trend this year, and the correlation coefficient with the US dollar index is on a rise trend.

02 On-chain fundamentals: The number of transactions for the year surged to 145 million, and the total transaction volume plummeted to 47.44 million BTC

Bitcoin’s average monthly active Address on the chain this year is about 948,700, a slight increase of 3.51% from last year’s monthly average of 916,500, but still lower than the average monthly active level in 2021. Among them, the average number of daily active addresses in September and November this year exceeded 1 million, which was the most active period of the year.

From the perspective of the distribution structure of Address balance and the distribution of coin holding time, the asset distribution of general Bitcoin users this year has continued the trend of accelerating small-amount, but the coin holding cycle has tilted from long and short polarization to long-term.

From the perspective of Address balance distribution structure, the number of Addresses with balances between 0.001 and 0.01 BTC, 0.01 and 0.1 BTC, and 0.1 to 1 BTC is the largest, currently accounting for 97.24% of the total number of Addresses. In other words, owning 1 BTC is equivalent to surpassing 97% of the coin holding Address. Moreover, the number of addresses in these three balance ranges increased by 13.95%, 10.92% and 8.89% respectively during the year, which is a significant increase. On the contrary, in the balance range of more than 1 BTC, only 1 to 10 BTC still has some growth, with an increase of about 4.51% during the year, and the others are almost unchanged. It should also be noted that the number of Addresses with balances between 10,000 and 100,000 BTC decreased by 6.14% this year. Overall, the trend towards smallerness has been further accelerated.

From the perspective of the currency holding cycle, at present, more than 6 months is the main currency holding cycle, of which 6 to 12 months, 1 to 2 years, 2 to 3 years, 3 to 5 years, 5 to 7 years and more than 10 years These 6 cycles account for more than 10%. Unlike last year, where the cut-off line for the change in proportion was mainly in 1 year, the cut-off line for this year’s change in proportion is mainly in 2 years. In each cycle of more than 2 years, the proportion of chips in 2 to 3 years increased by 6.7 percentage points during the year, the proportion of chips in 5 to 7 years increased by 3.2 percentage points during the year, and the proportion of chips over 10 years increased by 2.2 percentage points during the year. But on the contrary, this year’s additional issuance of chips in the two cycles of less than 24 hours and 1 week to 1 month is much smaller than last year. In general, the short-term trend of the currency holding cycle has not continued, but the long-term trend has been strengthened.

Another on-chain trend that is very different from last year is the divergence in the number of transactions and the total amount of transactions. This year, the cumulative number of on-chain transactions of Bitcoin exceeded 145 million, an increase of about 63% from 88.99 million last year, which is a very obvious increase. This year, the average monthly cumulative number of transactions was 12.141 million, and it showed a month-on-month growth trend during the year.

However, the ultra-high number of on-chain transactions did not lead to a simultaneous increase in the total number of transactions. The total on-chain transactions of Bitcoin this year are about 47.4498 million BTC, equivalent to about $1.34 trillion. The total value of coin-margined transactions plummeted by 2,547% from last year’s 1.256 billion BTC. This year, the average cumulative monthly trading volume is about 3.954 million BTC, equivalent to about 111.97 billion US dollars.

The reason for the divergence in the number of transactions and the total amount of transactions is mainly due to the explosion of the Ordinals protocol, which has also brought about a surge in transaction fees. This year, Bitcoin has accumulated about $641 million in on-chain transaction fees, a surge of 367.88% from last year’s $137 million. Among them, this year’s transaction fees mainly came from May, November and December (as of December 19), and the transaction fees in these three months exceeded 100 million US dollars, accounting for 70.16% of the annual fee income.

The average transaction fee this year is about $3.77, an increase of 146.41% from $1.53 last year. During the year, the average transaction fee surged from $0.62 to $26.72, an increase of 4,182%. At one point, it peaked at more than $37. It can be said that Bitcoin on-chain transaction costs have increased significantly this year.

03 Mining: Total Mining Revenue Over $9.8 Billion and Computing Power Up 106%

Mining has always been an important part of the Blockchain industry. This year, the total annual revenue (transaction fees and mining rewards) of Bitcoin mining is about $9.849 billion. Among them, the total revenue in November reached 1.158 billion US dollars, and overall, mining revenue showed an increasing trend during the year.

In line with the trading boom triggered by Ordinals, the percentage of fees in mining revenue also showed two peaks during the year. The first peak was in May, with an average daily fee of 12.74%, and the second peak was from November to December, with an average daily fee of 11.80 and 19.26%, respectively. It can be expected that if the mining reward is Halving next year, but the transaction boom caused by Ordinals continues, then the proportion of transaction fees may increase further.

From the cost point of view, the mining industry is facing a situation of difficulty and Computing Power continuing to rise this year. The mining difficulty of the Bitcoin network has been adjusted 26 times throughout this year, of which 19 times have been raised, and the continuous increase period is concentrated in the two time periods from late February to late April and mid-September to late November. Compared with last year, this year’s mining difficulty has been increased more times and the increase is also larger.

The current mining difficulty of the whole network is about 67.31T, an increase of 90.35% from the beginning of the year. Also growing is the average daily Computing Power of the entire network, which is currently about 562.1 EH/s, an increase of 106.27% from the beginning of the year. Unlike last year, the average daily Computing Power of the entire network only increased by 11.21%, and this year’s Computing Power increased significantly. Moreover, what needs to be compared is that the increase in Computing Power this year is less than the increase in currency price, which means that the mining industry has the opportunity to obtain excess returns.

According to the statistics of the BTC.com, as of December 22, in the PPS mode, the daily Mining income per T Computing Power BitcoinMining Pool is about 0.00000187 BTC, equivalent to about 0.082 US dollars, and in the FPPS mode, the daily Mining income per T Computing Power BitcoinMining Pool is about 0.00000268 BTC, equivalent to about 0.11 US dollars. ACCORDING TO COINMETRICS STATISTICS, Bitcoin’s Mining Revenue per Unit of Computing Power (Note: After cross-comparison, this income is close to the income of the FPPS model) increased by 85.21% during the year. Overall, mining revenues have been significant this year.

04 Application Layer: The total number of inscriptions exceeds 49.46 million, and BRC-20 has become a growth engine

The application of Bitcoin has not been much imagined. In the past, the applicability of Bitcoin was mainly reflected in the Lighting Network and WBTC, but this year, with the rise of Ordinals, the prospects for the development of Bitcoin applications have broadened.

First of all, judging from the most popular Ordinals, as of December 19, the cumulative number of Inions (inscriptions) produced has exceeded 49.46 million, knowing that this value was only 4 at the beginning of the year. There are two peaks in the growth of Inions throughout the year, the first peaking from late April to mid-September, and the second peaking from late October to the present. At its peak, the number of new inions added in a single day exceeded 400,000 on many days, and the highest once exceeded 500,000.

In terms of type, image and text are the two main forms, the former points to an image similar to Non-fungible Token, and the latter derives a BRC-20 Token. When Ordinals first came out, images were the main genre. In the first quarter, there were 378,000 images and only 270,000 texts. But since April, the pattern has quickly reversed, and the text has become mainstream. From the second to the fourth quarter, there were 47.14 million texts and only 1.067 million images. This is inseparable from the wealth creation effect of BRC-20 Tokens such as ORDI.

Compared with the more mature ERC-20 and Non-fungible Token markets, there is still a lot of room for the development of the Bitcoin ecosystem, especially the emergence of BRC-20, which has made some people see the popularity of similar EthereumDecentralized Finance Summer.

From the perspective of BitcoinDecentralized Finance’s TVL, it has increased from $96 million to $299 million this year, an increase of 211.46% during the year. The highest TVL once exceeded $300 million. And, it is worth noting that the TVL of the Lighting Network, the largest protocol on Bitcoin, has dropped from 87.90% at the beginning of the year to 70.95%, which, combined with the growth of total TVL, means that more applications have appeared in the Bitcoin network, and the TVL of these applications is growing rapidly.

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