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Crypto Trends to Watch 2024 Bitcoin Halving is a 2023 Mid-Year Crypto Outlook by BITmarkets. The study outlines the major revelations of the cryptocurrency market since the start of 2023.
The almighty Bitcoin has propelled by over 60% after stumbling the past year. How realistic is an expectation that the current year may witness Bitcoin capture its shadowed all-time-high peeping into 2024 when its halving is awaited?
Reviewing the opportunities and risks surrounding crypto in such turbulent times is demanded not only by traders of BITmarkets but also by the wide and diverse audience engulfed within financial markets.
The cryptocurrency market and related industries have undergone one turbulency after the next since the start of 2022, but ironically, these events contributed to building greater stability and ensuring higher transparency for the entire industry in the future. 2023 marked an exceptional year for the cryptocurrency market, with the market cap growing considerably throughout the year.
If you want to download this case study, here is a pdf version.
The following study summarizes recent revelations in crypto, explains their impact on major cryptocurrencies, and anticipates the risks and opportunities that could emerge in 2024 and beyond.
The year 2022 was a challenging one not only for the cryptocurrencies and related industries, but also for traditional and modern financial markets on a global scope. Russia’s invasion of Ukraine, pricy energy commodities and red-hot inflation have fundamentally affected markets in a negative way which damaged economies and led to resurgence struggles.
Such struggles remained omnipresent in 2023, yet investor and trader optimism brightened amid easing geopolitical and macroeconomic pressures. This has naturally reflected in the prices of individual stocks and cryptocurrencies. The market capitalization of both stocks and cryptocurrencies has grown throughout the year, but the value of crypto assets remains far from all-time highs.
The year 2023 seems to have blown a wind of change indeed, and the possibility of cryptocurrencies rocketing towards the highs of 2021 by 2024,
is quite valid given revitalizing market conditions. There are risks, or in other words, obstacles along the way, however, current market conditions may indicate a rather prosperous development and outcome for cryptocurrencies in the near future.
Peter Sumer
CEO
Cryptocurrencies came to light as a faster and cheaper way to transfer money in both centralized and decentralized scopes. Blockchain technology and the power of the internet have made it possible for digital assets to provide utility that can virtually benefit anyone. From a finance perspective, crypto assets offer a unique opportunity for investment in assets that are typically transparent, secure, highly-accessible and – for traders – very volatile.
Cryptocurrencies and the services & ecosystems linked to them have the potential to reshape the financial markets and other industries as well; just like how the internet did at the turn of the millennium. The crypto community is accelerating efforts towards building a range of technologies that can transform how we understand the world of finance. The range of new technologies that are a direct reflection of the existence of cryptocurrencies or the services associated with them is vast. These can be new & advanced forms of encryption, or smart contracts.
The cryptocurrency industry faced many challenges and obstacles in 2022, some of which still remain. Despite that, the current year has triumphed major cryptocurrencies including Bitcoin, Ethereum and Ripple, which in-turn championed digital asset investors and traders and revitalized the struck crypto ecosystem. One reinvestment after the next, the world of crypto is growing more advanced as fresh protocols that deliver more efficacy, accelerated operational ability and robust security levels are being introduced. The emergence of the metaverse phenomenon and the rise of artificial intelligence has also involved crypto elements, highlighting the significance of crypto in today’s day & age.
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
2023 has started strong for cryptocurrencies and other financial market assets, combatting headwinds with fierce force, and retaining hard-earned value. There are several trends of the current year and the ones to follow: more regulation, the rise of central bank digital currencies, the popularization of DeFi, more investments in stablecoins and the revitalization or deterioration of NFTs.
More Regulation
Identity verification strictness may increase as more cyberattacks and hacks have been noted recently. Increased regulation is intended to safeguard crypto traders’ funds and data. This can come in the form of increasing scrutiny of identity verification, which can bolster the effectiveness of regulatory frameworks set in place.
More than $2.1 billion worth of crypto assets were stolen in 2022. Other legal measures such as passing new laws which tackle money laundering and necessitating accurate & recurrent corporate reporting can achieve higher consumer protection.
Rise of CBDCs
Central banks from around the world are exploring ways to launch central bank digital currencies (CBDCs) in ways that can predominantly benefit the nation’s money flows. The implementation of government-monitored digital currencies on a national scale will boost protection from cyberattacks, at the expense of less anonymity and privacy for the everyday crypto trader.
Major CBDC developments are occurring in the United States. Other nations all around the world, including China, Japan, and The United Arab Emirates (UAE), are also doubling-up on research & development to find effective ways to adopt and use CBDCs in everyday life.
Popularization of DeFi
Decentralized Finance (DeFi) is the backbone of cryptocurrencies and may remain so for many traders, investors, and corporations in the crypto community. The rise of Web3 will be a driver to DeFi development as it carries the potential to leverage the capabilities of DeFi.
It is worth mentioning that the rise of DeFi would present a hurdle to implementing more regulation and launching CBDCs. This shows that not all initiatives strive for the same goals & outcomes. Since many corporations, protocols and projects are investing billions of dollars towards developing the new version of the internet, Web3, the capabilities of DeFi may increase in the years to come.
While both strive to achieve distinct end-results, there can be rises in centralization & decentralization at the same time, and only a test of time would reveal which of the two will add more aggregate benefit.
More Stablecoin Investments
Stablecoins have settled in the majority of crypto traders’ wallets, as they are needed for many reasons. Stablecoins present a hedge against inflation, promise stability in the value of digital assets, facilitate as a direct link to traditional markets, and act as a handy asset that can be easily converted to fiat and cash.
Without stablecoins, it’s increasingly difficult for investors and traders to cash out on gains. The importance of major stablecoins is expected to grow in the new chapter crypto is entering. If cryptocurrency market activity grows, so will stablecoins like Tether, USDC, Dai, and True USD. However, not all digital assets may see the bright side of the day, which brings us to the everlasting conundrum of nonfungible tokens, or NFTs in short.
NFTs – Are They Still Relevant?
NFTs were the hot topic one day. From the 1st quarter of 2020 to the first quarter of the following year, sales of NFTs from images & videos to in-game items skyrocketed 131 times, recognizing $2 billion in sales. However, it wasn’t all sunshine and rainbows for the digital assets of crypto fanatics and collectors.
NFT markets sustained a heavy blow in 2022, with volume traded per week hampered by more than an 80% decline from year highs hit in mid-May of 2022. Yet, NFT activity remained impressively steady in the first half of 2022 before slumping throughout the year’s remaining months.
Once an attractive asset, NFTs have devolved from an attractive asset to one that’s arguably seen as a nuisance amid harsh market conditions which grew attached to pessimism and skepticism towards NFTs. The NFT conundrum remains prevalent, but the trading volume of NFTs has been somewhat steady in 2023 amid the bullish rally of major cryptocurrencies.
According to NFTNDX.IO, authenticated NFT daily transfer activity surged in 2023 to levels unseen since mid-2022, showcasing signs of growth since the final months of 2022. NFTs have also enjoyed more attention from behemothic firms like Amazon & eBay, indicating that NFTs remain relevant.
Looking ahead into the horizons of 2024 and beyond, Bitcoin is set to undergo a periodic halving event which occurs every 4 years or 210,000 blocks on the Bitcoin blockchain. The initial block reward for BTC was 50 BTC, while the current block reward stands at 6.25 BTC, and the next block reward will be 3.125 BTC, and the halving continues.
This event, programmed into the Bitcoin code, slows down the rate at which Bitcoins are mined and generated. The main incentive behind this action is to limit the total supply of BTC, which shall be maxed out at 21,000,000 BTC.
By comparing the mechanisms of BTC with traditional financial systems, we see that printing fiat money, which increases supply, causes inflation, while reducing BTC supply – given strong demand – would boost its value. This makes Bitcoin similar to gold, which has limited supply that cannot be increased.
Last year, cryptocurrencies including Raven (RVN) and Dash (DASH) underwent a halving event, and in August of this year, it’s time for Litecoin (LTC) supply to be slashed by half. Such events keep cryptocurrency assets valuable through the simple forces of demand and supply.
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