The Bitcoin halving event planned for April is expected to push the price upwards.
According to Luno, South Africa’s largest crypto exchange, 2024 is shaping up to be another big year for cryptocurrency.
Luno believes upcoming events will have a significant impact in driving the growth of digital currencies this year.
During the first week of January, Bitcoin, the world’s most popular cryptocurrency, got off to a strong start, trading at $45,000 (R846,000) since April 2022.
At the time of publication, Bitcoin was trading at $42,700 (R804,000).
Luno expects the Bitcoin halving event planned for April to push the price of the world’s largest cryptocurrency upwards.
It explains that Bitcoin rewards paid to miners are cut in half approximately every four years as a way to avoid excess supply and potentially rapid inflation.
These events are known as halvings, and such events have historically been credited by analysts as having a major impact on the price, as they reduce the supply of new Bitcoin in the market and reinforce the sense of Bitcoin’s scarcity, it is noted.
The next halving event is expected to occur in April 2024, and it will drop the number of Bitcoin rewards approved per block from 6.25 to 3,125.
“What happened before? The first halving was followed in the following months by the price of Bitcoin rising more than 8,000% on pre-halving levels. The price of Bitcoin also increased by about 3,000% after the second halving in 2016. The last halving in 2020 was followed by a bull run that ended at an all-time high of almost $69,000,” says Luno.
AltCoinTrader GM David Porter agrees, saying the Bitcoin halving event has traditionally led to big bull runs.
“The supply of newly mined Bitcoin will halve, leading to a supply shock that could coincide with the spot ETF approval and the resulting increase in demand. This could be severe for the bulls throughout 2024 and perhaps even early 2025 give impetus,” says Porter.
Farzam Ehsani, CEO and co-founder of VALR, adds that the halving event will most likely bring higher price pressure as has been the case in the past.
Luno believes that the outcome of the US election in November 2024 could have profound implications for the crypto industry.
“US regulatory and financial decisions tend to have a noticeable impact on the global crypto industry, as we have seen with the Bitcoin spot ETF applications. But there is also an interesting development of government officials playing in crypto for voter support,” says Luno.
“Crypto started to enter the conversation in the last election, albeit in a small way. The amount of talk has increased since then, and it could herald a more different approach to crypto than we’ve seen in recent years.
According to Luno, research firm Chainalysis recently pointed out that crypto investing in sub-Saharan Africa tends to be more retail-driven than other regions, possibly a sign that crypto has become an important part of people’s daily lives.
“No country illustrates this better than Nigeria, which ranks second overall on our Global Crypto Adoption Index and also leads the region in raw transaction volume,” Chainalysis noted.
Luno points out that Nigerians are increasingly turning to cryptocurrencies for storing and transferring value, to access international markets.
More recently, it adds, it has also been used as a means of overcoming challenges in accessing dollars and hedging against naira volatility.
A Spot Bitcoin ETF is an investment fund that tracks the price of Bitcoin throughout the trading day, just like a stock, according to Investopedia. This allows investors to gain exposure to the value of the underlying asset without owning it directly.
The Securities and Exchange Commission approved 11 spot Bitcoin exchange-traded funds on Jan. 10, a landmark decision that experts say could lead to an influx of institutional investments in Bitcoin, Luno says.
ITWeb reported last week that South African-based cryptocurrency players are confident that the approval will lead to a rise in the price of Bitcoin.
“In 2017 we had initial coin offerings, and in 2020 we had NFTs [non-fungible tokens]. The next bull run is also likely to have ‘a thing’, a lightning rod for its popularity, and the spot ETF could be that,” says Luno.
Given the hype around artificial intelligence (AI) in 2023 and the obvious benefits of automated trust for transactions in an automated ecosystem, Luno believes that AI could be a particularly interesting development for crypto.
“AI development doesn’t look like it’s slowing down anytime soon, with experts citing last year’s breakthroughs as one of the most important in human history. It looks like the technology will not leave any industry untouched, including crypto. From AI-powered chatbots to automated trading bots, the technology seems a natural fit for programmable money, aka crypto.
According to Luno, it’s time to pay attention when youngsters like JP Morgan take the fight.
It says that the banking giant recently created its own blockchain and started trading tokenized assets on it.
Luno explains that tokenization is a process in which an asset is represented by a crypto token and perpetuated on a blockchain.
“This could be in the form of a house, a fraction of a house, music royalties, gold, bonds, stocks, etc., etc.
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