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We have been in this bear market for a long time. It is similar to enduring a long winter, where one must always be prepared with a hat and gloves. You find yourself wondering, “When does the sun come out?” However, my sentiment has shifted. It is not simply the anticipation of summer or the approaching bull market. Instead, I already have a T-shirt on and take off my jacket. I think there are clear signs that the bull market is already here.
2023 was an exciting year for the industry. The combined crypto market capitalization rose nearly 93% from January 1, 2023’s $794 billion to $1.53 trillion as of December 5. As we are very close to the end of 2023, it is time to look ahead and turn our focus to the next year. In this article, I have collected the most important crypto events to look forward to in 2024.
In 2024, I believe there will be six different market catalysts that can serve as a crucial area of interest for market participants. They can also create new investment opportunities.
Find Bitcoin ETF Approval in USA
In October 2021, the US Securities and Exchange Commission (SEC) granted approval for the country’s first BTC-based exchange-traded fund. The financial watchdog has yet to approve a spot ETF for Bitcoin in the United States, but I expect that to change soon.
On November 30, SEC officials met with representatives of Grayscale, a prominent crypto-asset manager that sought to convert its existing Grayscale Bitcoin Trust into an exchange-traded fund. The company won a critical court battle against the agency in August, legally forcing the latter to review its BTC ETF application.
A day earlier there was also a formal meeting between the financial watchdog, BlackRock, and Nasdaq. The asset manager filed for a spot Bitcoin ETF with the SEC in June and a spot Ethereum ETF in November. Beyond the above developments, Bloomberg Intelligence ETF analyst James Seyffart said he believes the probability of SEC Bitcoin ETF approval early next year is around 90%. Analysts believe the approval will take place sometime between January 8 and 10.
The market is currently optimistic, and a Bitcoin spot ETF in the US will play an essential role in onboarding institutions seeking to achieve diversified asset allocation via BTC investments.
Ethereum Dencun
Major upgrades to Ethereum’s network are often one of the most important events of the year. This will be the case in 2024, when the Dencun upgrade is expected to take place in the first quarter of 2024, introducing the long-awaited proto-dank hardening.
Proto-danksharding is the prototype of an iteration of danksharding technology developed by Ethereum. Due to Ethereum’s limited scalability, transactions became slow and expensive during periods of heavy usage. Developers plan to use sharding, where the network is divided into smaller pieces called shards that can independently execute smart contracts and process transactions.
After the Dencun upgrade, rollup-based layer-2 chains such as Arbitrum One, Optimism and Base can add cheaper data to blocks on the Ethereum mainnet via blobs, which can be sent and attached to blocks with the data inside inaccessible to the Ethereum Virtual Machine. With blobs and blob-bearing transactions, layer-2 chains can store and retrieve off-chain data on the Ethereum mainnet in a cost-efficient manner, making layer-2 transactions significantly cheaper after the Dencun upgrade.
Dencun will also provide other benefits for Ethereum users, including optimized block space, reduced data storage costs, improved cross-chain communication, and improved security through the deprecation of the SELF-DESTRUCT function.
The end of the US interest rate hike
Since early 2022, the federal funds rate has steadily increased through Q3 2023 as the Federal Reserve sought to combat inflation in the United States. Between January 2022 and August 2023, the effective rate rose from 0.08% to the current target rate of 5.25% and 5.5%.
With US inflation falling from a peak of 9.1% in June 2022 to as low as 3.2% in October 2023, I believe the Fed’s rate hike cycle is nearing its end. The market expects the first rate cut to take place as early as May 2024. Under this impetus, positive sentiments in the cryptocurrency industry are expected to strengthen, enhancing the appeal of Bitcoin and other digital assets.
Why does it matter to us? If we think of the different financial markets as a series of pools at different levels, at the highest level we find the US monetary and bond market, which can be compared to the largest pool.
Currently, interest rates are high, resulting in a significant amount of “water” in this pool. However, as soon as interest rates are lowered, it is as if the water starts to flow to smaller pools, such as stocks and crypto. When interest rates fall, the bond market becomes less attractive, and individuals are more likely to invest their money in assets that offer higher risks and returns, such as crypto.
Circle IPO
Circle, the issuer of the USD Coin (USDC) stablecoin, is preparing to go public via an initial public offering (IPO) early next year, according to a November 2023 report. As it will make the firm the first publicly traded company among issuers, the move is expected to support the adoption of cryptographic stablecoins.
However, this is not Circle’s first attempt to go public. A year ago, the stablecoin issuer terminated its agreement with the special purpose acquisition company (SPAC) Concord Acquisition Corp. The reason for the termination was reportedly due to the SEC’s lack of approval of the transaction, which was first announced in July 2021.
Bitcoin halving
Just like major Ethereum upgrades, Bitcoin halving is one of the crypto industry’s most important developments for 2024. However, unlike ETH hard forks, these events happen roughly every four years.
The event will reduce the amount of new Bitcoin that miners can receive for each newly mined block by 50%. By cutting the new coin supply in half, Bitcoin will become scarcer and less inflationary.
With improved demand-supply dynamics, I expect BTC’s price to rise after the event. In fact, all previous halvings have been followed by major crypto bull runs.
FTX case nears resolution
FTX’s founder, Sam Bankman-Fried, was convicted of multi-billion dollar fraud in November. The approval to liquidate approximately $880 million in assets to repay creditors was obtained as part of the resolution process. These developments indicate that FTX is gradually entering a stage where the exchange will undergo restructuring. The resolution of this case is expected to restore some confidence and regulatory clarity to investors, potentially attracting new retail funds to the industry. SEC Chairman Gary Gensler has indicated that he is willing to consider FTX’s restart under the condition that new leadership takes SBF’s place and that the exchange operates within legal boundaries. If approved by the regulator, such a restart could help increase confidence in FTX or, at least, mitigate the negative impact of the scandal.
The road to the next crypto bull market
With the US approving BTC spot ETF, the Dencun upgrade and other important catalysts, we could very likely see a Bitcoin Super cycle in 2024. However, there are potential negative factors that could occur next year.
For example, the now-defunct Mt.Gox exchange is expected to pay back 137,000 BTC to creditors, and the US government plans to liquidate the Bitcoin stash seized in the Silk Road case. These events can cause selling pressure and potentially lead to falling prices of cryptocurrencies. Additionally, the global regulatory landscape for cryptocurrencies remains uncertain, opening the door to unforeseen events.
On the other hand, I believe that the liquidation of BTC from the Mt.Gox case and the US government’s Silk Road seizure could be the emergence of a real bull market. This can be accompanied by the widespread adoption of cryptocurrencies and the introduction of innovations. Whatever the future holds, it’s important to “Do Your Own Research” (DYOR) and be prepared for what could possibly be the most bullish market in crypto history.
Disclaimer for Uncirculars, with a Touch of Personality:
While we love diving into the exciting world of crypto here at Uncirculars, remember that this post, and all our content, is purely for your information and exploration. Think of it as your crypto compass, pointing you in the right direction to do your own research and make informed decisions.
No legal, tax, investment, or financial advice should be inferred from these pixels. We’re not fortune tellers or stockbrokers, just passionate crypto enthusiasts sharing our knowledge.
And just like that rollercoaster ride in your favorite DeFi protocol, past performance isn’t a guarantee of future thrills. The value of crypto assets can be as unpredictable as a moon landing, so buckle up and do your due diligence before taking the plunge.
Ultimately, any crypto adventure you embark on is yours alone. We’re just happy to be your crypto companion, cheering you on from the sidelines (and maybe sharing some snacks along the way). So research, explore, and remember, with a little knowledge and a lot of curiosity, you can navigate the crypto cosmos like a pro!
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