The Bitcoin price bounced back in a big way in 2023, with other digital assets following suit.
But will gains in the cryptocurrency space continue in 2024? The impact of increased crypto market regulation and oversight, and the potential for more widespread use of blockchain technology, has transformed the industry from the Wild West to a more stable and reliable landscape that is attracting a wave of new market participants. Looking ahead, the likely implementation of spot Bitcoin exchange-traded funds (ETFs) in the US is a significant development that could further accelerate the growth and legitimacy of the crypto market.
With the year almost over, the Investing News Network (INN) caught up with industry experts to get their insight on what’s to come in the ever-evolving world of cryptocurrencies and blockchain technology in 2024.
Regulation and oversight to continue to increase
Cryptocurrencies have been operating in a gray area since their inception. Lack of oversight has allowed malicious actors to take advantage of market participants, leading to billions of dollars in losses over the years and prompting the US Securities and Exchange Commission (SEC) to up the ante, cracking down on digital to crack asset exchanges and providers.
Nevertheless, the crypto industry continues to inspire interest, and the SEC’s involvement in regulation has led to more widespread and institutional adoption of certain tokens; it also attracted more investors to the space.
Analysts see this trend continuing into 2024. The recent settlement between the US Department of Justice and Binance, a cryptocurrency exchange accused by the SEC of listing unregistered securities, has given sector participants reassurance, according to Matteo Greco , a research analyst at Fineqia International.
“The resolution of uncertainties surrounding the exchange, especially given Binance’s significant market dominance, has broader implications for the entire digital asset market,” he told INN via email.
“For the first time since its inception, the digital asset market appears to be aligned with regulators, fostering a more collaborative relationship. This alignment is expected to facilitate a stronger connection between digital assets and traditional finance , by attracting capital from new investor cohorts.” Greco added.
Bitcoin and Ethereum are the largest cryptocurrencies by market capitalization, but interest is no longer limited to these popular coins. Other cryptocurrencies, referred to as altcoins, are gaining traction in the market as investors and traders explore the potential of a diverse range of digital assets.
While Bitcoin and Ethereum will more than likely remain the dominant options, Ripple’s XRP, along with Pi Coin and Solana, are attracting interest from institutions and individual investors. Pi Coin is designed so that anyone can mine or distribute tokens on a smartphone, and Solana is gaining popularity among developers due to its fast transaction speed and low fees. There are even some analysts predicting that Ethereum could outperform Bitcoin in 2024 after the Proto-Danksharding upgrade that happens sometime in the first quarter.
“Another notable trend (in 2023) was the emerging collaboration between prominent traditional finance entities and the digital asset space,” Greco said. “Traditional financial firms are actively exploring the capabilities and benefits that blockchain technology offers, and are seeking to formulate business strategies around its application. This trend is poised to remain a decisive factor in the coming years.”
HSBC’s (NYSE: HSBC ) collaboration with Metaco, a Swiss blockchain company acquired by Ripple in May, is one example. On November 8, HSBC issued a press release announcing that it will use Harmonize, an institutional platform provided by Metaco, as a digital custody service for clients looking to invest in tokenized securities. According to CoinDesk, this news signaled to many XRP supporters that financial institutions may one day adopt the XRP token.
Investors Waiting for US Spot Bitcoin ETFs
The launch of spot Bitcoin ETFs in the US is attracting widespread attention, and could be a major catalyst for the cryptocurrency ecosystem in 2024. By providing greater liquidity, transparency and accessibility, these vehicles are expected to bring new investors into the market , promoting the Bitcoin price along the way.
After initially resisting the idea, the SEC appears to be warming up to the possibility of approving mock Bitcoin ETFs, with many industry experts predicting that multiple applications will be approved by January 10. This is the deadline by which the government body will have to either accept or reject a proposal from ARK Investment and 21Shares.
“Certainly, within the initial 10 days of the year, the approval or rejection of the (spot Bitcoin ETF) submissions will already be an important milestone for 2024,” Greco told INN.
Greg Taylor, chief investment officer at Purpose Investments, also believes the SEC is likely to approve spot Bitcoin ETFs in the short term. “The best thing that has to happen with (crypto) is just building the ecosystem. So getting more custodians in place, getting more suppliers and barter, I think is going to go a long way. Having Fidelity involved and having different players like Blackrock (NYSE:BLK) involved — it just can’t be understated how important that is because then we get more heavily regulated companies involved. Building the ecosystem to fit within that environment is a huge win and should help everything,” he said.
Will Halving Affect Bitcoin Price?
The Bitcoin Halving Event is a scheduled reduction in the amount of newly created Bitcoins rewarded to miners. Halves occur every four years, and 2024’s event is expected to take place in April. Many are already speculating about the impact the halving will have, especially in light of the cryptocurrency’s recent rally.
“The Bitcoin halving has always been an important event for the market. However, with approximately 93 percent of the BTC supply already in circulation, the event’s impact has evolved,” Greco said.
“In the past, when mining rewards were high, the halving strongly affected token inflation, pushing prices higher through the dynamics of supply and demand. Now, with lower rewards and most of the supply already generated, the halving’s impact is more closely tied to miners and, consequently, the protocol’s security,” he noted.
Bitcoin miners will need to upgrade their hardware and improve their energy efficiency to optimize their operations with a reduced reward rate. Historically, halving events have been characterized by boom and bust cycles leading up to and preceding the event. The 2024 halving is unlikely to be any different.
“The positive aspect of the mining process lies in demonstrating that, despite a 50 percent reduction in block rewards, the network maintains its stability and security, with miners’ competition increasing – a testament to the network’s resilience. The success of a halving event serves as a significant bullish indicator for the Bitcoin network,” Greco said.
Blockchain technology to keep pulling
Cryptocurrencies are built on blockchain technology, and Precedence Research estimates that this market will be worth an estimated US$2,334.46 billion by 2032, achieving a compound annual growth rate of 85.7 percent between 2023 and 2032. are expected to embrace its potential by using it to streamline supply chain management, improve cybersecurity defenses and more.
Among the possibilities offered by blockchain technology is the tokenization of real assets (RWAs). Through tokenization, blockchain technology and RWAs have the potential to increase the safety and security of assets by providing more secure infrastructure for asset management.
Greco said the tokenization of RWAs, as well as on-chain identity verification, caught his attention in 2023.
“The RWA trend gained significant traction in 2023, driven primarily by the tokenization of T-bills due to high interest rates,” he explained in correspondence with INN. “However, with central banks expected to lower interest rates (in 2024), narrative may lose momentum. I expect a shift towards tokenization of other assets such as stocks, bonds, real estate, cars and more significant momentum will get.”
Investor takeaways
The crypto industry has come a long way, with increased regulation and oversight leading to a more stable and trustworthy landscape. The likely implementation of spot Bitcoin ETFs in the US and the potential for increased use of blockchain technology are developments that could further accelerate the market’s growth and legitimacy.
Summing up the past year and looking ahead, Taylor said: “2023 was a year that I think surprised people across the board with the strength in the technology stocks and the NASDAQ Composite (INDEXNASDAQ:.IXIC) . And I think the crypto market has a lot of parallels with that. Many people have written off much of the risk in technology sectors in 2022. I think 2023 is going to be a good year since we kind of got through it. It seems like it was a good, positive outcome to push prices higher, and 2024 should be something we can build off of that and then take it higher.”
Heading into 2024, it is clear that the interest in cryptocurrencies and blockchain technology is no longer limited to just Bitcoin and Ethereum, and the growing cooperation between traditional financial entities and the digital asset space is poised to be a decisive factor in the coming years. to stay
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Security Disclosure: I, Meagen Seatter, have no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Bitcoin Well is a client of the Investing News Network. This article is not paid content.
The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to do their own due diligence.
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