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

Written by: Carol, PANews

"Repair" and "rebirth" are the two key words for Bitcoin in 2023. On the one hand, against the backdrop of the Fed's continuous interest rate hikes, global fiscal policy tightening, and geopolitical tensions, Bitcoin reversed last year's downward trend and entered a steady upward channel; on the other hand, with the rapid development of the Ordinals protocol, the BRC-20 inscription is hot in the market, bringing new vitality to the Bitcoin ecosystem 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 reviews the data changes of Bitcoin in the four major aspects of the trading market, on-chain fundamentals, mining and applicability this year.

TLDR;

Trading Market

• In 2023, Bitcoin has basically completed the recovery from last year's decline, with the price rising to more than $42,000. The annual increase is as high as 158.06%, and the annual upward trend is very clear and sustainable.

• Historical data shows that production cuts and price increases usually occur at the same time. 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%'s chips are in a profitable state, and the profit level 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.

• This year, the price changes of Bitcoin have basically no statistical correlation with the Dow Jones Industrial Index and the US dollar index in general. However, in some periods, 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 number of active addresses 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 Bitcoin users continued the trend of accelerating small-amount holdings, but the holding period shifted from polarization between long and short to long-term holdings. The number of addresses with a balance between 0.001 and 1 BTC accounted for 97.24% of the total number of addresses. The number of chips held for 2 to 3 years increased by 6.7 percentage points this year.

• The number of transactions and the total transaction amount have developed differently. This year, the total number of Bitcoin on-chain transactions exceeded 145 million times, an increase of about 63% compared with last year; the total on-chain transaction amount for the whole year was about 47.4498 million BTC, a sharp drop of 25,47% compared with last year.

• This year, the total transaction fees on the Bitcoin chain are about 641 million US dollars, a surge of 367.88% compared with last year. The average transaction fee per transaction this year is about 3.77 US dollars, an increase of 146.41% compared with last year.

mining

• This year, the total annual revenue of Bitcoin mining (transaction fees and mining rewards) is about 9.849 billion US dollars. In December, the average daily fee ratio surged to 19.26%.

• 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%. The increase in computing power is smaller than the increase in the price of the currency, which means that the mining industry has the opportunity to obtain excess returns.

Applicability

• The total number of Inscriptions generated throughout the year has exceeded 49.46 million. There are two peak times for the growth of Inscriptions throughout the year. The first peak time is from late April to mid-September, and the second peak time is from late October to the present.

• The TVL of Bitcoin DeFi increased from $96 million to $299 million, with a year-to-date increase of 211.46%. The TVL share of the largest protocol, Lightning Network, dropped from 87.90% at the beginning of the year to 70.95%. The diversified development of the Bitcoin ecosystem has begun to emerge.

01 Trading market: The annual price increase of the currency exceeded 158%, and the proportion of profitable chips exceeded 87%

The market is the most intuitive window to observe the development of Bitcoin. In 2023, Bitcoin basically completed the repair of last year's decline. The price of the currency rose from $16,500 at the beginning of the year to more than $42,700 at the end of the year. The annual increase was as high as 158.06%, which is close to the level at the beginning of 2022. In addition, the upward trend of Bitcoin this year is very clear and sustainable. There are few large rises and falls exceeding 5%. The average daily month-on-month currency price change is only 0.29%, the highest does not exceed 9.77%, and the lowest does not exceed -7.83%.

Next year, Bitcoin will usher in its fourth production cut, and the expectation of production cut is considered to be an important driving force for the rise in the price of the currency. If the six months before and after the production cut (180 days) are each a cycle, then in the first six months of the first three production cuts, Bitcoin rose by 134.62%, 51.30% and -1.89% respectively; in the second half of the production cut, Bitcoin rose by 955.74%, 37.24% and 72.21% respectively. In the three production cuts and six cycles, Bitcoin only fell in the first six months of the third production cut, when it was a market winter, but the decline was still not large. In general, historical data shows that production cuts and price increases usually occur at the same time.

According to BTC.com's forecast, the fourth halving is expected to occur on April 19, 2024. Currently, Bitcoin has entered the first half of the halving cycle (starting on October 22 this year), with the price of the coin at $29,900 on that day. It is expected that the halving will provide impetus for the price to rise next year.

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

On the other hand, the Bitcoin futures market has been active this year, and the total open interest has continued to rise during the year, from $6.379 billion at the beginning of the year to $10.463 billion at the end of the year, an increase of 64.02%. However, the leverage ratio is declining. According to CryptoQuant data, the estimated leverage ratio of the Bitcoin futures market this year fell from 30.67% at the beginning of the year to 20.22% at the end of the year (as of December 21), and has fallen back to the level at the beginning of the year, basically at the average level of the past three years.

MVRV is the ratio of market value to realized value. If the value is greater than 1, it means that the current market price is higher than the "fair price" when the chips are traded, and the market price may be overvalued. This year, Bitcoin's MVRV has been greater than 1 since January 13, rising to 1.96 at the end of the year, with an average of about 1.40 for the whole year. This shows that the market conditions of Bitcoin this year have basically been overvalued.

MVRV greater than 1 also usually means that more chips may be in a profitable state. According to glassnode data, the proportion of profitable chips in circulation of BTC increased from 50.77% at the beginning of the year to 87.76% at the end of the year (as of December 19), which means that most chips are in a profitable state. The current proportion of profitable chips is higher than the maximum value last year, and the overall profitability of Bitcoin this year is much better than last year.

From the perspective of profit strategy, LTH-SOPR/STH-SOPR (output profit ratio of long-term holders/output profit ratio of short-term holders) rose 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 the larger the ratio, the higher the profit level of long-term holders is than that of short-term holders. In general, the profit level of long-term holders is better this year, and this advantage becomes more obvious towards the end of the year.

In terms of institutional funds, it is worth noting that the news of spot ETF applications has repeatedly affected the Bitcoin trading market (related reading: "Bitcoin ETF in Numbers: 5 Futures ETFs have a total asset of nearly 1.3 billion US dollars. How much is Bitcoin affected by the news of applications?"). The frequent news of applications means that the relationship between Bitcoin and traditional financial markets is deepening to a certain extent. However, according to statistics, the price changes of Bitcoin this year have basically no statistical correlation with the Dow Jones Industrial Index and the US dollar index in general. Among them, the number of days that Bitcoin is uncorrelated with 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 periods, Bitcoin has a certain correlation with the Dow Jones Industrial Average and the US Dollar Index, with a certain positive correlation with the former and a certain negative correlation with the latter. Specifically, Bitcoin has a weak negative correlation with both (relativelyXiaobai NavigationThe number of days with weak positive correlation (the 7-day average of the correlation coefficient is between -0.5 and -0.8) is 54 days and 96 days, accounting for 15.56% and 27.67% respectively; the number of days with weak positive correlation (the 7-day average of the correlation coefficient is between 0.5 and 0.8) is 114 days and 11 days, accounting for 32.85% and 3.17% respectively; the number of days with strong negative correlation with the US dollar index (the 7-day average of the correlation coefficient is above -0.8) is 40 days, accounting for 11.53%. In addition, from the trend point of view, the correlation coefficient between Bitcoin and the Dow Jones Industrial Index is on a downward trend this year, while the correlation coefficient with the US dollar index is on an upward trend.

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

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

Judging from the changes in the address balance distribution structure and the holding time distribution, the asset distribution of general Bitcoin users this year continued the trend of accelerating small-amount holdings, but the holding period shifted from polarization between long and short to long-term.

From the distribution structure of address balances, the number of addresses with balances between 0.001 and 0.01BTC, 0.01 and 0.1BTC, and 0.1 and 1BTC is the largest, currently accounting for 97.24% of the total number of addresses. In other words, owning 1BTC is equivalent to having surpassed 97% of coin holding addresses. Moreover, the number of addresses in these three balance ranges increased by 13.95%, 10.92%, and 8.89%, respectively, during the year, with significant increases. On the contrary, in the balance range above 1BTC, only 1 to 10BTC has a certain increase, 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 has decreased by 6.14% this year. Overall, the trend of small amounts has been further accelerated.

From the perspective of the holding cycle, at present, more than 6 months is the main holding cycle, among which the chips in the six cycles of 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 account for more than 10%. Unlike last year, when the dividing line of the change in proportion was mainly 1 year, the dividing line of the change in proportion this year is mainly 2 years. In each holding 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 in more than 10 years increased by 2.2 percentage points during the year. But on the contrary, the proportion of chips in the two cycles of less than 24 hours and 1 week to 1 month this year is much smaller than last year. Overall, the short-term trend of the 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 between the number of transactions and the total transaction amount. This year, the total number of Bitcoin on-chain transactions exceeded 145 million times, an increase of about 63% from 88.99 million times last year, a significant increase. This year, the average monthly cumulative number of transactions is 12.141 million times, and it has shown a monthly growth trend throughout the year.

However, the extremely high number of on-chain transactions did not bring about a synchronous increase in the total transaction volume. This year, the total on-chain transaction volume of Bitcoin was about 47.4498 million BTC, which is equivalent to 1.36 million BTC.contract 1.34 trillion US dollars. The total transaction volume of currency-based transactions plummeted by 2547% compared with 1.256 billion BTC last year. The average monthly cumulative transaction volume this year is about 3.954 million BTC, which is equivalent to 1.34 trillion BTC.contract 111.97 billion U.S. dollars.

The main reason for the divergence in the number of transactions and the total transaction amount is the outbreak of the Ordinals protocol, which has also resulted in a surge in transaction fees. This year, the total on-chain transaction fees for Bitcoin are about $641 million, a surge of 367.88% from $137 million last year. Among them, this year's transaction fees mainly come from May, November and December (as of December 19), and the transaction fees for these three months have exceeded $100 million, accounting for a total of 70.16% of the annual fee income.

The average transaction fee per transaction this year is about $3.77, up 146.41% from $1.53 last year. The average transaction fee per transaction soared from $0.62 to $26.72, an increase of 4182%. The peak once exceeded $37. It can be said that the transaction cost on the Bitcoin chain has increased significantly this year.

03 Mining: Total mining revenue for the year exceeded US$9.8 billion, and computing power increased by 106%

Mining has always beenBlockchainThis year, the total annual revenue of Bitcoin mining (transaction fees and mining rewards) is about 9.849 billion US dollars. The total revenue in November alone reached 1.158 billion US dollars. Overall, the mining revenue has been on an upward trend this year.

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

From the perspective of cost, the mining industry is facing a situation of continuous increase in difficulty and computing power this year. The mining difficulty of the Bitcoin network has been adjusted 26 times this year, of which 19 times have been increased. 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, the number of mining difficulty increases this year is more and the increase is larger.

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

According to BTC.com statistics, as of December 22, under the PPS mode, the daily mining income of the Bitcoin mining pool per T computing power is about 0.00000187 BTC, which is equivalent to 100% of the total mining income.contract 0.082 USD. Under the FPPS mode, the mining income of Bitcoin mining pool per T computing power per day is about 0.00000268 BTC, equivalent to about 0.11 USD. According to COINMETRICS statistics, the mining income per unit computing power of Bitcoin (Note: after cross-comparison, this income is close to the income of FPPS mode) has increased by 85.21% this year. Overall, the mining income this year is considerable.

04 Application level: The total number of inscriptions exceeds 49.46 million, and BRC-20 becomes the growth engine

There has never been much imagination about the application of Bitcoin. In the past, the application of Bitcoin was mainly reflected in the Lightning Network and WBTC. This year, with the rise of Ordinals, the prospects for the development of Bitcoin applications have broadened.

First, from the perspective of the most popular Ordinals, as of December 19, the cumulative number of Inscriptions generated has exceeded 49.46 million, which is only 4 at the beginning of the year. There are two peak times for the growth of Inscriptions throughout the year. The first peak time is from late April to mid-September, and the second peak time is from late October to the present. During the peak period, the number of new Inscriptions per day exceeded 400,000 for many days, and once exceeded 500,000.

In terms of type, images and text are the two main forms. The former refers to images similar to NFT, while the latter derives from BRC-20. TokenWhen Ordinals was first released, images were the main type. In the first quarter, there were 378,000 images and only 270,000 texts. But after April, this pattern quickly reversed, and text became the mainstream. From the second to the fourth quarter, there were 47.14 million texts and only 1.067 million images. This is related to the BRC-20 TokenIt is inseparable from the wealth-creating effect.

At present, the popularity of BRC-20 is still continuing, and the trading market for picture-type Inscriptions is also gradually developing. Compared with the more mature ERC-20 and NFT markets, there is still a lot of room for the development of the Bitcoin ecosystem. In particular, the emergence of BRC-20 has made some people see the popularity similar to Ethereum DeFi Summer.

From the perspective of Bitcoin DeFi's TVL, it has increased from $96 million to $299 million this year, with an increase of 211.46% this year. The highest TVL once exceeded $300 million. In addition, it is worth noting that the TVL share of the Lightning Network, the largest protocol on Bitcoin, has dropped from 87.90% at the beginning of the year to 70.95%. Combined with the growth of total TVL, this means that more applications have appeared in the Bitcoin network, and the TVL of these applications is growing rapidly.

The article comes from the Internet:2023 Bitcoin Annual Report: The currency price rebounded by 158%, and the total mining revenue exceeded US$9.8 billion.

Related recommendations: SignalPlus Macro Research Report: As the year draws to a close, the crypto market stagnates

Traders began to gradually reduce trading volume, cross-asset volatility also began to decline, and the Bank of Japan became the only remaining "event risk" this year. Written by: SignalPlus Many people have started to take holidays for the two holidays these two days.exchangeThere is no large volume. I think the largest recent transaction is less than 250,000 US dollars. I bought a put contract at 37,000 at the end of March. It expires at the end of the year...