Bitcoin (BTC): $6 trillion traded in 2023

More than $6 trillion worth of bitcoins were traded in 2023, down 38% from 2022. This is equivalent to more than 2.3 times the French GDP value. Although this figure may seem significant, the circulation speed of bitcoin (BTC) will decrease in 2023. This phenomenon is driven by “holders” more numerous, that is to say long-term holders of bitcoin. This is often a positive signal for the ecosystem…

Market activity: the major figures for 2023

In 2023, the volume of bitcoins traded decreased compared to 2022. However, the average price of bitcoin (BTC) remained stable. Over the past year, the average price of bitcoin was $29,143, compared to $27,760 in 2022. Overall:

• The number of active addresses remained stable.
• Bitcoin’s dominance has soared to 50%. The last lowest was at the end of 2022 at 36%.
• The share of long-term bitcoin holders exceeded 75% in 2023, a record.
• IThere are more than 80% of bitcoin addresses in ” profit “.
• In 2023, the quantity of bitcoins in circulation will increase by 1.75%. This growth rate continues its reduction in the long term until it tends towards 0%.

Finally, according to the data provided by CoinMarketCap, the annual bitcoin trading volume is more than $6 trillion. That’s the equivalent of more than 240 million bitcoins traded, or a dozen times the total bitcoin supply. If we report this value on a daily basis, the average bitcoin trading volume in 2023 was $16.4 billion per day.

In terms of bitcoins traded, market activity had been 88% higher in 2022. The market nevertheless remains very active in the short term, and the speed of exchange of bitcoin is very different depending on whether they are speculators or long-term holders.

The countries that have looked at bitcoin the most

In the 10 countries that searched for the word the most “bitcoin” on Google we find Nigeria, El Salvador, Ghana, Georgia, Slovenia and even Switzerland. It is remarkable that Nigeria, whose inflation is approaching +29% in a context of population growth, is a major player in the future of cryptocurrencies. Similarly, El Salvador has seen strong interest in bitcoin due to the adoption of bitcoin as legal tender. For its part, Georgia seems attracted to cryptocurrencies due to the context of war and the migrations which threaten its border (exile of many Russians, flight of capital and search for security).

Globally, searches associated with the word “bitcoin” on Google have seen renewed interest since October 2023. But this renewed interest remains limited, proof that the rise in the price of bitcoin is occurring without extreme volatility and, for the moment, outside the general public. Despite everything, the fact that the most unstable countries or those in need of a transaction and custody network have an interest in bitcoin is encouraging.

Bitcoin circulation speed drops

The speed of circulation of bitcoin corresponds to the volume exchanged over the year divided by the total supply. In monetary theory, the speed of circulation of money is a major indicator. The speed of circulation of a currency indicates the level of confidence the economy has in the currency. In the case of bitcoin, a low bitcoin circulation speed means that the available supply is reduced, causing the price to immediately rise due to high market activity.

Since the end of 2022, we have clearly seen that the trend of reduction in velocity has been accompanied by an increase in price. This is a classic phenomenon on bitcoin, and any sustainable bull market must result in a scarcity of the active supply of bitcoins. Analogously, the peak of bitcoin’s circulation velocity was reached in September 2022, at the worst of the bear market.

Symmetrically, a sharp reduction in velocity reflects more long-term holders and more winners. The chart above, provided by Glossnode, shows the supply change in gain on bitcoin (BTC). A bullish recovery in the market is typically accompanied by a strong increase in supply gain.

But the circulation speed of the dollar is rebounding…

On average, a dollar is exchanged 1.3 times per year in the fall of 2023. A value increasing compared to 2020. The COVID crisis has caused a strong increase in the quantity of money in circulation, without this currency circulating. The speed of circulation of the dollar then reached a historic low, at less than 1.2 times per year. The rebound in velocity recorded since 2020 marks the return of a certain dynamism to the American economy. But the velocity nevertheless remains at historic lows.

Furthermore, the slowdown in inflation may also have the effect of reducing the speed of circulation of money. As a result, a slowdown in the speed of circulation of the dollar can result in an increase in the price of bitcoin.

A higher trading volume than Gold, but a much lower capitalization

The debate on the speed of circulation of a currency is linked to its scarcity (or its extreme abundance). For example, since ancient times, the speed of circulation of Gold was lower than that of silver or bronze. Gold served as a secure means of savings or as collateral for important transactions. The question of the speed of circulation of bitcoin therefore partly answers the question of what is the relationship of users with its scarcity.

But then is bitcoin more valued than gold? In absolute terms, the answer is negative. The Gold market is capitalized at more than 12,000 billion dollars, that is to say more than 14 times the bitcoin market, and double all the bitcoins exchanged in a year.

But in terms of volumes traded, bitcoin easily exceeds Gold. The (physical) volume of Gold traded in 2022 amounted to nearly $300 billion, well below the $10 trillion of bitcoin over the same period. But it is clear that we are dealing with two very different markets here. In the 2024 outlook unveiled by SwissBorg, we recalled the essential differences between the two assets.

“Bitcoin is designed and designed to serve as a means of payment and ideally to preserve value over the long term. Bitcoin is not used to make jewelry, to secure monetary relations between countries (not yet, according to the most fervent supporters), or to transmit historical value. Bitcoin is also significantly riskier than gold (gold has one of the best risk-reward ratios), but it can also be efficient, and with significantly higher returns. Thus, these two assets: Gold and Bitcoin, are different but complementary.

However, gold and Bitcoin have no nationality; they are not subject to the whims of time and politics, and these assets are the most valuable. »

Bitcoin (BTC) 2024: SwissBorg reveals its outlook – Tremplin.io

In conclusion

The year 2023 marked a sharp drop in the circulation speed of bitcoin. A major bullish factor for the past year. Despite everything, the equivalent of 6,000 billion dollars of bitcoins were exchanged in 2023. This is more than twice the wealth produced in 1 year by France. The value of exchanges is, however, decreasing compared to 2022 (-38%).

At the same time, the share of winning addresses reached an all-time high while the share of long-term holders increased. If this phenomenon is lasting, we may be dealing with a phenomenon of “hoarding”, as economists say. But the speed of bitcoin trading remains considerable, far beyond all other assets. Thus, the bitcoin market alone weighs 20 times more in terms of exchanges than the physical gold market, even though it is 14 times less capitalized! Enough to remind you of the differences between these two complementary assets.

If the velocity of bitcoin decreases, the velocity of the dollar rebounds under the effect of inflation and continued growth. A slowdown in the velocity of the dollar in the coming months could benefit bitcoin. In any case, the return of a significant number of long-term holders encourages an upward movement whose structure is similar to that of the past.