Crypto Trends to Watch & 2024 Bitcoin Halving

Bitcoin (BTC)

Throughout the course of 2023, Bitcoin has climbed in value, setting higher highs and lows as it marches towards growth to price at nearly $27,000 at the time of writing. To put this into the context of significance and awe, this price-tag has been unwitnessed since mid-2022 after emerging in March.

After stumbling in 2022 to a demeaning $15,750 in November, outweighed by financial system slumps, geopolitical issues, higher inflation and hawkish central bank moves, the world’s favorite crypto, alongside the cryptocurrency market, has grown considerably as the outlook for the Federal Reserve policy tightening has evolved, eminent economic recessions became more possible & a lingering U.S. banking crisis pushed investors towards Bitcoin and other top cryptos (Duggan, 2023).

Fear and pessimism among investors have shifted to noticeable optimism towards cryptocurrencies. The banking crisis has presented cryptocurrencies, mainly Bitcoin, as a safer alternative to the calamitous impacts ensuing within the U.S. banking and finance sectors.

Going into 2024, Bitcoin is once again under the influence of regulatory scrutiny related to stablecoins that represent an integral part of the wallets of crypto traders as they rely on them to convert, purchase, and transact BTC and other popular cryptocurrencies.

Other revelations revolve around central bank digital currencies (CBDCs), which present a centralized digital currency, arguably as an alternative to Bitcoin. Should CBDCs launch into circulation and become more utilized by individuals & corporations, it may pose a risk to the adoption and utility of BTC.

On a more realistic note, Bitcoin took little time to cool off in 2023. This may indicate a foundation for a bull frenzy and higher buy power.

Bitcoin (BTC) Price Chart – 2023

Source: CoinMarketCap

Ethereum

Ethereum underwent a major facelift in 2022 when its verification mechanism changed from proof-of-work (PoW) to proof-of-stake (PoS). “The Merge” has also marked the beginning of a new era for Ethereum – but one that is provoking conflicting reactions as the PoS protocol reduces decentralization of the entire system, which has capabilities of facilitating future Ethereum regulations for governments.

Ethereum hit highs in May of last year, growing considerably during 2023 by more than 50% to more than $1,800 per ETH. The mother of all crypto coins has noticeably soared in April following its “Shapella” upgrade, which was bound to enhance ETH’s mainnet performance, security layers, and efficiency (Maheshwari, 2023).

Another major revelation surrounding Ethereum was increasing gas fees due to the rise of memecoins and the frenzy that came with it, giving notable rise to Pepe the Frog (PEPE), which, rather quickly, fell into oblivion one day after the next.

The Shapella Upgrade

In mid-April of 2023, the renowned Ethereum blockchain implemented the much-awaited “Shapella” upgrade which boosts ETH mainnet performance, security protocols an operational efficiency, but can also play a role in lowering gas fees for operations of layer-2 solutions.

This presented Ethereum as an appealing blockchain with less costs for traders and accelerated transaction speeds, which in turn boosted the value and attractiveness of the ETH coin.

Ethereum (ETH) Price Chart – 2023

Source: CoinMarketCap

Ripple (XRP)

The main advantage of XRP is the Ripple payment protocol the token is a part of. In the future, Ripple may serve as an alternative to the traditional SWIFT system for cross-border transfers currently adopted by traditional banks and other major entities. Ripple appears to present a more cost-effective and faster option to SWIFT and could even replace it in the future, which would positively reflect in XRP’s prospective price.

A major issue for Ripple Labs since 2020 has been a lawsuit by the United States Securities and Exchange Commission (SEC) alleging that the company sold up to $1.3 billion worth of unregistered securities through XRP. The lawsuit and the potential fine associated with it have caused considerable distrust among potential investors.

The United States District Court in the Southern District of New York ruled in favour of Ripple Labs on July 13, 2023. According to documents filed, the judge has granted summary judgment in favour of Ripple Labs, ruling that the XRP token is not a security in regards to programmatic sales on digital asset exchanges. The SEC lawsuit sought to compel Ripple to stop offering its XRP token under the premise that XRP was a security and, thus, required additional regulation.

The judgment means, XRP shall get rid of the main sources of uncertainty about its future direction, and it can be expected that its price would rise in the coming years.

Terra/Luna

The Terra system was one of the most interesting and popular systems on the cryptocurrency scene in 2021, competing for the big bucks with traditional financial behemoths. The principle was simple; its stablecoin TerraUSD (UST) was to be held at 1 UST = 1 USD and in case of deviation, the token Luna (the primary backing asset for Terra) would help it return to its original level by burning. *

What the system did not count on, however, is the panic that would grip investors if the UST deviated further. This is exactly what happened in April 2022. It was essentially an attack on the currency we are familiar with from the traditional money environment. The UST deviated from the USD up to the level of 0.35 UST = 1 USD, which Luna could not cover and subsequently lost up to 99% of its value.

The fall of such a promising project was reflected in investor sentiment. This, combined with the situation in the mainstream financial markets, led investors to perceive cryptocurrencies as too risky. Such crisis of confidence was followed by a further decline in the prices of the majority of crypto assets.

The year is 2023, and while both cryptocurrencies linked to Terra technology, Terra Classic (LUNC) and Terra (LUNA), have grown considerably during the first months of 2023 amid the bullish power overtaking the crypto markets, they have dwindled and weakened as the community has evidently lost hope in the once-pioneering stablecoin.

* Coin burning is a technique used by the cryptocurrency community when reducing the supply of a particular cryptocurrency. There can be various reasons, such as trying to increase its price. In the case of stablecoins, it serves the purpose of maintaining parity with the pegged currency. If the price of a stablecoin deviates too far upwards, new tokens are issued; if it deviates too far downwards, burning occurs. This is performed, for example, by sending already issued tokens by the user to a wallet that only has the ability to receive cryptocurrencies but not send them, effectively withdrawing received tokens from circulation.

Mt. Gox

The Mt. Gox exchange was once the largest in the market, and when it collapsed in 2014, roughly 850,000 Bitcoins were lost. Till this day, it still remains the largest crypto robbery in history.

A saga that continues to exist; the creditors of the fallen cryptocurrency exchange are seeking repayment, and the exchange will provide base repayments, intermediate repayments and early lump-sum repayments to creditors until the 31st of October, 2023.

Being a hot topic on the crypto scene, it is still of significance as it affects the price of Bitcoin and other major cryptocurrencies. After reports indicated that wallets linked to the defunct crypto exchange Mt. Gox and the U.S. government had shifted large amounts of Bitcoin (Graves, 2023), towards the end of April, Bitcoin plunged as much as 7% in one hour. The Mt. Gox conundrum is expected to remain impactful on the crypto market for the foreseeable future.

FTX

FTX was once the world’s 2nd largest crypto exchange, and its story says the following: there’s nothing called too big to fail in such a young market. The crypto industry continues to lack strong institutional foundations, especially in terms of transparency and public scrutiny. The founder of the exchange, Sam Bankman-Fried (SBF), has become an infamous figure in many eyes.

Another company founded by SBF called Alameda Research was independent of FTX. However, in early November of 2022, cryptocurrency news outlet Coindesk reported that the two companies were closely intertwined, and that Alameda Research had assets of roughly $14.6 billion. Most of the assets were held in the FTT token, which was a product of FTX (Allison, 2022). Following the announcement that Binance would sell its roughly $2 billion-worth of FTT tokens, there was a sample case bank run, which FTX was unable to withstand as it could not pay investors back.

The exchange issued a statement discouraging potential investors from depositing on the exchange and freezing all withdrawals. Again, like the collapse of Project Terra, the collapse of FTX had a negative impact on the overall market, and the prices of individual cryptocurrencies dropped noticeably. 

Fast-forward to late May of 2023, after being hunted down by the United States Internal Revenue Service (IRS) for billions of dollars related to the exchange’s bankruptcy, rumors to reboot the fallen exchange are becoming more of a reality, and plans are being plotted down by FTX CEO John Ray III.

News of the relaunch of FTX, or FTX 2.0, has circulated, which has boosted the price of the FTT token by 12% within 24 hours, and the increased trading volume, reaching $27.2 million, reflects heightened activity from speculators (Surya, 2023).

Ripple (XRP) Price Chart – 2023

Source: CoinMarketCap