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Why Bitcoin Skyrocketed 80% in H1 2023: Key Factors

3 mins
Updated by Ryan Boltman
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In Brief

  • Bitcoin price nearly doubled from around $16,000 on January 1 to above $30,000 on June 30, according to BeInCrypto data.
  • During the first half of the year, several traditional financial firms led institutional interest in BTC with their application for a Spot ETF.
  • Bitcoin Ordinals also emerged on the blockchain, bringing new interest and higher adoption and utility for the flagship digital asset.
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Bitcoin was the best-performing asset in the first six months of the year, with the flagship digital asset rising more than 80% to close above $30,000 on June 30.

In the first half of the year, the crypto market dealt with the effect of the FTX collapse and last year’s collapse of several crypto-related firms. During this period, the industry also witnessed renewed institutional demand for BTC and the emergence of Ordinals on the blockchain network.

Amid these events, BTC’s price nearly doubled from around $16,000 to above $31,000, outperforming other significant assets like gold, S&P 500, Nikkei 225 index, and others.

Bitcoin Price returns
BTC Monthly Returns (Source: Coinglass)

Traditional Institutions Pile in for BTC Spot ETFs

On June 15, BlackRock, the largest asset management firm in the world with around $10 trillion worth of assets under management, applied for a Bitcoin spot ETF. This move triggered other institutions like Fidelity and others to file a similar application for a spot ETF.

Bitcoin Spot ETF
Bitcoin ETF Rejections (Source CCData)

While the U.S. Securities and Exchange Commission (SEC) reportedly claimed these ETF applications were inadequate, the firms immediately addressed the regulator’s concern, prompting speculations within the community that the U.S. might soon witness the approval of its first spot ETF.

Bitcoin Ordinals Emerge

Ordinal Inscriptions emerged on the Bitcoin networks during the year’s first half. The Ordinals Inscriptions are similar to NFTs as it allows the inscriptions of text, audio, and images into the smallest denomination of a Bitcoin, Satoshi.

At the peak of its craze, Ordinals pushed Bitcoin’s average daily transactions to a record high, leading to higher network fees. While some BTC maximalists decried its effect on the blockchain, a Grayscale report noted that Ordinals could aid BTC adoption by bringing more attention to the flagship digital assets.

Bitcoin Ordinals
Bitcoin Ordinals (Source: Dune Analytics)

Data from Dune Analytics shows that the total number of Bitcoin ordinal inscriptions to date is now 14.5 million, generating over $55 million in fees.

Regulatory Issues

Amid these positive developments, regulatory authorities in the United States increased their regulatory pressure on the crypto industry.

Financial regulators like the SEC and the CFTC filed charges against major crypto exchanges, including Binance and Coinbase. The SEC alleged that these firms violated federal securities law with their operations within the country.

Additionally, crypto firms like Beaxy, Paxful, and others exited the country, citing the unfavorable regulatory environment.

Meanwhile, other jurisdictions like Hong Kong, Singapore, the U.K., and Nigeria introduced pro-blockchain policies designed to attract more crypto entrepreneurs to their regions.

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Oluwapelumi Adejumo
Oluwapelumi believes Bitcoin and blockchain technology have the potential to change the world for the better. He is an avid reader and began writing about crypto in 2020.