The cryptocurrency industry has seen its fair share of ups and downs in recent years, with 2023 being no exception. Despite a downturn in the first half of the year, the industry saw some positive developments. This includes Bitcoin ETF applications by traditional finance companies like BlackRock. As we look towards 2024, the industry has renewed hope and excitement. In this post, we will outline the key events to watch out for and their potential impact on the market. Whether you’re a seasoned investor or new to cryptocurrencies, understanding these events will help you make informed decisions and navigate the market.
Crypto Market Performance of December 2023
In December 2023, the crypto market experienced significant gains, with Bitcoin reaching new 52-week highs above $44,700 due to optimism surrounding potential spot Bitcoin ETF approvals.
Bitcoin ended the month by 12.6% and gained 156% for the year, while Ethereum prices rose by 15.7% for the month and 91% for the year.
Inflation trends that were lower in 2023 triggered a rebound in cryptocurrencies and other risk assets. Among the most popular altcoins, Solana (SOL) and Avalanche (AVAX) were top performers in 2023.
The total market capitalization of the global cryptocurrency market peaked at over $2.8 trillion in November 2021, dropped below $800 million during the worst of the crypto winter in 2022, but recovered to $1.7 trillion heading into 2024.
Spot Bitcoin ETF Approval
There are currently 13 asset management firms, including BlackRock, WisdomTree, Valkyrie, and others, that are waiting for a decision from the SEC on their proposals to launch spot Bitcoin ETFs.
Unlike Bitcoin futures contracts, these ETFs would invest in the cryptocurrency itself. The SEC has until January 10 to announce its decision on a joint proposal from ARK and 21Shares. Still, insiders predict that several applications will be approved in early January before the deadline.
On December 21, the SEC met with at least seven spot Bitcoin ETF applicants Thereafter, giving them until December 29 to amend their applications. If an applicant does not submit the final version of their application by December 29, they will reportedly not be included in the first wave of approved funds.
The SEC has denied several applications for spot crypto ETFs, citing concerns about the crypto market’s susceptibility to manipulation and the safety of investors.
Redemption Payment
According to reports, the SEC has asked issuers to allow cash redemptions of their Bitcoin funds. This means that issuers would have to make Bitcoin transactions using cash. Instead of exchanging the ETF’s underlying assets with a market maker.
While this model would keep broker-dealers out of the equation. However, it could potentially increase transaction costs for issuers and fees for investors. James Koutoulas, founder of Typhon Capital, says that this model would enable Wall Street banks to create new fund shares using cash. Thereafter, broadening the audience for the crypto market.
Are Institutional Investors a Threat?
Crypto enthusiasts are concerned about the involvement of big financial institutions like BlackRock and other ETF issuers in the crypto market. Thereafter, this could lead to centralization and stagnation.
The fear is that these companies may end up owning a significant portion of the world’s Bitcoin, which could undermine the appeal of Bitcoin as a means for investors to exercise sovereignty over their wealth.
However, Nigel Green, founder and CEO of deVere Group, believes that approving the first wave of Bitcoin spot ETFs will pave the way for institutional investors to enter the crypto market. Thereafter, leading to greater mainstream adoption and reshaping the global financial landscape.
What’s Happening in Crypto Market 2024?
The spot Bitcoin ETF approvals will undoubtedly be the most significant crypto market news at the beginning of 2024. However, there are several other crucial themes and catalysts that cryptocurrency investors should keep an eye on throughout the year.
Bitcoin Halving Event
The next Bitcoin halving event may occur in May 2024, which will lead to a reduction in the rewards paid to miners for each block of transactions added to the blockchain. In the past, Bitcoin halvings have acted as positive drivers for Bitcoin prices.
Continued Courtroom Battles on Crypto Regulations
In 2024, regulators may continue their courtroom battles against cryptocurrency issuers and exchanges. Thereafter, providing clarity on the classification of digital assets. Moreover, how much reach the SEC and the CFTC should have?
The SEC is currently in court with Ripple over unregistered security sales. Moreover, they’ve also sued exchanges like Coinbase, Binance, and Kraken for operating unregistered exchanges. Additionally, there may be more crypto laws from Congress in 2024. With JPMorgan CEO Jamie Dimon recommended lawmakers to ban cryptocurrency outright. Thereafter, Elizabeth Warren called it a matter of national security.
New CBDCs
It is expected that in 2024, an increasing number of countries worldwide will introduce central bank digital currencies (CBDCs). These are digital versions of a country’s legal tender currency that are backed and issued by its central bank.
The Bahamas, Jamaica, and Nigeria have already introduced CBDCs. Moreover, over 100 other countries are exploring the possibility of launching their digital currencies.
US Economy, Interest Rates, & Inflation
Crypto investors will keep a close eye on the performance of the U.S. economy, particularly inflation and interest rates in 2024. The U.S. FED’s ability to maintain a soft landing for the economy and cut interest rates could trigger a rally in cryptocurrencies, stocks, and other risk assets.
Even if there is a mild U.S. recession in early 2024, experts believe that newly approved U.S. spot Bitcoin ETFs will see an inflow of over $2.4 billion to keep the Bitcoin price elevated. Despite potential volatility, the Bitcoin price may remain above $30,000 in Q1 2024.
Also Read- Vital Facts About Mainnet in Cryptocurrency
Looking Forward
As we move into 2024, the crypto market is poised for some exciting developments. The introduction of new CBDCs and the US economy will play a crucial role in shaping the market. As always, staying informed and making informed decisions will be the key to success in this ever-evolving industry.
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