The crypto winter thaws: Revisiting digital assets and the blockchain
- December 1, 2023: Vol. 10, Number 11

The crypto winter thaws: Revisiting digital assets and the blockchain

by Benjamin Cole

The cryptocurrency and blockchain universe is a lot larger than bitcoin. Nevertheless, bitcoin is the poster child for the entire sector and, until recently, the year 2023 was definitely on the icy side for bitcoin trading ranges.

Add to that prominent digital denizen Sam Bankman-Fried, who was in and out of the headlines all year, after the collapse of his cryptocurrency exchange FTX — a debacle made all the more unsettling to the general public because of its indecipherability. Bankman-Fried, worth an estimated $26 billion when 2022 started, is presently penniless, convicted of fraud and awaiting his March 28, 2024, sentencing date, during which he faces up to 110 years in prison.

And a chilly 2023 followed on the 2022 collapse of the touted Terra stablecoin, a digital currency putatively backed and linked to the U.S. dollar, and thus was supposed to be as solid as the U.S. greenback. At one time the fourth-largest cryptocurrency on the globe, Terra, and its related coin Luna, suddenly became worthless in mid-2022, in part due to a curious 19.45 percent yield paid to certain investors in a related unit. In 2023, a Terra founder was arrested in Dubai attempting to travel internationally using fake Costa Rican documents.

By mid-2023, financial headlines and pundits were declaring the “crypto winter” was ascendant, a long stretch in which many digital assets froze at values well below their past zeniths.

And, not incidentally, the air was taken out of the fintech boom by proliferating odes to artificial intelligence, which had the look of the “next big thing.”

However, the first half 2023 turned out to have been the cyclical nadir for bitcoin. After cresting at $64,400 in November of 2021, bitcoin declined to a low of less than $16,500 almost exactly one year later. But since the late 2022 divot, bitcoin has steadily rallied, defying naysayers and doomsayers and striking above $34,000 in early November of 2023.

So, in 2024 will cryptocurrencies and blockchain technologies again step forward when decentralized finance (more commonly referred to as de-fi) assumes larger roles in all forms of commerce? Or, perhaps as traditional financiers and transaction enablers become more efficient, will the digital realm remain in a virtual prison: interesting, sometimes useful, but ever an oddity sprinkled with recurrent unsettling fiascos?

And other imponderable downsides lurk in 2024 for virtual currencies and exchanges. Israel and other nations are concerned that terrorist groups and governments are using cryptocurrency systems to finance mayhem. A future major terrorist attack on a large Western city or government, financed through digital currencies, might bring about a global crackdown on the somewhat opaque cryptocurrency sector.

Some concede higher interest rates could also hamstring digital coin values. “High rates are headwinds for bitcoin, since it is not an earning asset,” observes Mark Bell, head of private capital and business advisory partner at Balentine.


Despite the travails, there are some indicators the sector is gaining ground, according to a recent report issued by Matt Hougan, CIO of Bitwise Asset Management.

“Blockchain revenue, the best measure of crypto’s real-world utility, is up significantly from the last cycle. In 2019, the last time crypto was emerging from a bear market, Ethereum did $35 million in revenue. So far this year, it’s done $1.75 billion.”

For the uninitiated, Ethereum is a decentralized blockchain platform that hosts a peer-to-peer network that in turn enables “smart contracts.” Smart contracts allow participants to transact with each other, without a trusted central authority. Transaction records are immutable, verifiable and securely distributed across the network, giving participants full ownership and visibility into transaction data.

Transactions are sent from and received by user-created Ethereum accounts. Senders authorize transactions and then spend Ether, Ethereum’s native cryptocurrency.

In a nutshell, people can conduct normal business transactions through Ethereum, such as paying for services an accountant has rendered, if the accountant agrees to be paid the Ether.

Taking Ether instead of dollars for payment might not be for the faint of heart: Ether traded for $4,626 a unit in November of 2021, but for $1,819 in November 2023. However, the digital currency has rebounded from lows of less than $1,200 near the start of 2023.

Stablecoin, despite the aforementioned 2022 Terra debacle, are also growing in popularity because it’s perceived as a relatively steady store of value. Stablecoin settled nearly $1.5 trillion in transactions during the third quarter of 2023, which in global terms may be a small number but is more volume than Mastercard did in the same time frame, says Hougan.


In bitcoin circles, much discussed is the pending “halving” of the currency, which financial house Morgan Stanley has estimated is due in April 2024.

“Historically, most of bitcoin’s gains come directly after a ‘halving’ event that occurs every four years,” explained Morgan Stanley, in a recent report.

The four-year cycle and halving may conjure up images of quadrennial human celebrations, elections or ancient religious rites. But Morgan Stanley says the halving is serious.

“Specifically, every four years the number of bitcoins created every 10 minutes is cut in half. Eventually, when there are 21 million bitcoins in existence, no more bitcoins will be mined,” explained Morgan Stanley.

The bitcoin promise is the shrinking new supply of bitcoins and, ultimately, the fixed supply will boost bitcoin values. Unlike fiat currencies, which appear set to expand indefinitely, the number of bitcoins will become chiseled in digital granite.

The bitcoin “shortage” after a halving can spur a bull run, advises Morgan Stanley.  “There have been three such runs on bitcoin since its inception in 2011, each lasting 12 to 18 months after the halving.”

So, wait for the halving and watch bitcoin prices soar. But don’t watch too long, says Morgan Stanley. After a bull run, investors typically begin selling and too many bitcoin miners enter the business. This leads to a bitcoin glut. “Previous troughs [declines in in bitcoin values] were about 83 percent off their respective highs,” warns Morgan Stanley.


With each passing year, major Wall Street financiers appear to embrace de-fi a little more, and cryptocurrency
exchange-traded funds (ETFs) may be on the horizon.

“We are now seeing for the first time ETFs that provide access to bitcoin, which will allow for greater and easier retail flows, as well as easy trading and other opportunities that are likely to be a tailwind for crypto,” affirms Bell.

The world’s largest private asset manager, BlackRock, with nearly $10 trillion under management, has proposed to the Securities and Exchange Commission a bitcoin ETF, which would invest in spot bitcoin. The SEC has not yet approved the ETF, but the federal regulatory agency recently lost a federal appeals court case where it defended its decision to reject such ETFs.

The emergence of the BlackRock Bitcoin ETF and other ETFs thus appears possible and would allow ordinary investors a comfortable liquid avenue for owning cryptocurrencies and some measure of validation of the de-fi sector by Wall Street proper.


Hard as it may be to believe today, NFTs (non-fungible tokens) were kick-started in the pandemic era in that long ago year of 2021, when cryptocurrency entrepreneur Sina Estavi shelled out almost $3 million for an NFT of the first-ever tweet from Jack Dorsey, co-founder and former CEO of Twitter.

This was also a time when then First Lady Melanie Trump launched an NFT collection featuring digital renditions of her eyes.

An NFT is a unique digital image semi-officially recorded and stored on the Ethereum blockchain.

In NFTs’ heyday, the digital artwork Everydays: The First 5000 Days by Mike Winkelmann (professionally known as Beeple) sold for $69.3 million at a Christie’s auction, suitably held online. Today, many NFTs are worth 10 percent or less of early values, and often zero. The amount of NFTs traded in a month fell to near $80 million worldwide in July 2023, down from more than $2.8 billion traded in August 2021.

To some, NFTs are the latest iteration and warning of an old lesson in investing that was embodied by the Dutch from tulip mania that began in 1634 and dramatically crashed in 1637, generally considered to have been history’s first recorded asset bubble.

For many digital assets, the crypto winter may be thawing, but for NFTs the prospects have an Ice Age look.


In the end, perhaps the Achilles heel of cryptocurrencies is the very virtual nature of the coin, the fact that digital money does not exist except in a computer chip somewhere.

Bitcoins and other cyber cash have the same indeterminate value as art, collectible cars, rare coins and stamps. The value is not based on cash flows or a reasonable estimate of probable future cash flows and profits. Even gold has value in decorative and industrial applications or as jewelry.

Some e-money supporters cite the truism that fiat currencies are notoriously fickle when it comes to holding value. Indeed, the value of fiat currencies is typically all in one direction (as in down) while cryptocurrencies may undulate.

Maybe, but fiat currencies have an ace in the hole: They are accepted by issuing governments as payment for taxes. There is a reason why a Ben Franklin has value and sellers will accept it: They can use the greenback to pay taxes or trade it to someone who does pay taxes in U.S. dollars.

Though a supporter of digital currencies, Bell concedes, “The major challenge to its [cryptocurrency’s] adoption is that it cannot be used for what is most people’s largest expense, which is the payment of taxes to sovereigns.”

Nevertheless, unlike art or collectible cars, bitcoins and other currencies trade continuously, assuring traders of their relative value at any given moment. For transactional purposes, e-currencies will likely have a growing role to play in global commerce, contends Bell.

Perhaps as transaction enablers, blockchain technologies have a solid future and cryptocurrencies a role in that virtual money world.

Yet, determining or projecting the value of cryptocurrencies — and especially of NFTs — will likely always be more art than science, or even something worked out on a financial spreadsheet.

Or as one wag recently put it: “Sometimes de-fi is just sci-fi.”


Benjamin Cole ( is a freelance writer based in Thailand.

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