2023 has been a mixed year for the cryptocurrency industry. While the downturn seen in early 2022 continued through the first half of 2023, there were some silver linings in the form of Bitcoin ETF applications by traditional finance heavyweights such as BlackRock. This provided the much-needed support for the legacy coin to gain value and break the spell of the prolonged bear market. The bitcoin halving scheduled by early 2024 is expected to trigger a fresh bull run.
Given this, 2024 is being awaited with home and enthusiasm in the cryptocurrency industry. This post will provide an overview of six key events to look out for in 2024 and their potential impact on the market. Understanding these events allows you to navigate the crypto market better and seize investment opportunities. Whether you’re a seasoned investor or new to cryptocurrencies, this information will help you make informed decisions.
Bitcoin ETF Approval and Ethereum ETF Anticipation
There is great optimism in the market regarding the approval of a Bitcoin Exchange-Traded Fund (ETF) by the SEC in January 2024. Institutional investors consider using Bitcoin as part of their diversified asset allocation strategies. This approval could open up new avenues for investment in cryptocurrencies, attracting more traditional investors yet to enter this space. Furthermore, it is anticipated that after the approval of a Bitcoin ETF, there will be further expansion with an Ethereum ETF, providing even more investment options in the crypto market.
Ethereum Cancun Upgrade and Token Issuance Boom
In Q1 2024, the Ethereum Cancun upgrade is scheduled to take place, unlocking further potential for Ethereum and Layer 2 (L2) ecosystems. This upgrade is expected to increase scalability and efficiency for Ethereum-based applications. With this enhancement, projects utilising Zero-Knowledge (ZK) L2 solutions will likely experience a token issuance boom. ZK L2 projects implement cryptographic techniques that ensure privacy and security while significantly reducing transaction costs and increasing transaction speed. Many Platforms are actively working on implementing ZK L2 solutions and stand to benefit from this upgrade.Impact of U.S. Interest Rate Hiking Cycle on Cryptocurrency Markets
The U.S. interest rate hiking cycle is nearing its end, creating positive sentiments in cryptocurrency markets. As early as May 2024, there may be a rate cut, enhancing the appeal of Bitcoin and other cryptocurrencies. Lower interest rates make alternative investments like cryptocurrencies more attractive, as they offer the potential for higher returns. Lot of Platforms allow users to invest in cryptocurrencies with attractive interest rates on crypto deposits, providing opportunities for investors to capitalise on this trend.
Circle’s IPO and Adoption of Cryptographic Stablecoins
Circle, the issuer of the stablecoin USDC, is preparing for its initial public offering (IPO) in the first half of 2024. This move is expected to support the adoption and acceptance of cryptographic stablecoins. Stablecoins provide a more stable value than other cryptocurrencies due to their pegged nature. They offer reduced volatility and are often used for everyday transactions and as a store of value. New age Billers accept stablecoin payments, making it convenient for users to pay bills using this digital asset.
Bitcoin Halving and Increased Scarcity
Bitcoin will undergo a halving event in 155 days, further increasing the scarcity of this digital asset. Bitcoin halving occurs approximately every four years and reduces the block reward miners receive by half. Historically, this reduction in supply has led to price increases in Bitcoin due to its increased scarcity. To illustrate this point, let’s look at previous halvings:
Before the 2012 halving event: Bitcoin price was $12 per BTC
After the 2012 halving event, Bitcoin price reached $260 per BTC
Before the 2016 halving event: Bitcoin price was $650 per BTC
After the 2016 halving event, Bitcoin price surged to over $20,000 per BTC
FTX Case and Regulatory Clarity
The FTX case is entering its later stages and facing restructuring. As regulatory clarity emerges, it is expected to attract new retail funds into the crypto market. Regulatory oversight is crucial for investor protection and market stability. Increased regulatory clarity provides investors with more confidence in investing in cryptocurrencies. Crypto trading platforms should comply with regulations and offer secure trading options for retail investors, ensuring a safe and transparent environment for cryptocurrency investments.
Final Thoughts
The Crypto Market Outlook for 2024 presents several key events that could shape the future of the crypto space. The approval of a Bitcoin ETF, the Ethereum Cancun upgrade, the impact of U.S. interest rate cuts on cryptocurrency markets, Circle’s IPO, Bitcoin halving, and regulatory clarity surrounding the FTX case are all factors to watch closely. By staying informed about these developments, you can capitalise on potential investment opportunities in the crypto market. Conduct thorough research and consult with financial experts before making investment decisions.
(The author is Gracy Chen, Managing Director at Bitget)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)