As we fast approach the end of Q1 for 2024, what better time to look back, and ahead, and reflect upon the highs and lows crypto investors experienced in 2023, and what they can potentially expect for the remainder of 2024.
Following the absolute dumpster fire of crypto investing that was 2022, following the collapse of, at the time, the world’s third-largest cryptocurrency exchange FTX, the so-called domino effect had a devastating on cryptocurrencies, with assets such as Bitcoin (BTC) dropping to around $18,400. This was in stark contrast to the previous year, when it hit around $64,000.
As the months ticked by, many crypto assets slowly but surely began to regain their losses in 2023. Sure, 2023 showed that the crypto bubble had well and truly burst, but it also showed that crypto such as Bitcoin, Ethereum, Tether, Binance Coin, Solana, and all the other big hitters, were easily able to rally.
2023 may have seen crypto stage somewhat of a comeback, but it was still a year of peaks and troughs. But what does this mean for crypto markets in 2024? Well, that’s what we’re going to explore in more detail right now.
What is Cryptocurrency?
Before we can look ahead to what crypto investors might expect for the crypto markets in 2024, we’re first going to take a quick overview of what cryptocurrency really is.
By now you’ve probably heard of cryptocurrency, and likely associate it with Bitcoin, which is arguably the king of all crypto. Crypto is a very volatile investment, in that its price can fluctuate massively day by day. It’s a high-risk investment with potentially very high rewards, which is why there are so many crypto investors out there.
In simple terms, a cryptocurrency is a virtual, or digital form of currency that is secured via cryptography. Because of this, it is considered to be more safe and secure than regular currency, as it is virtually impossible to counterfeit it and double spend, plus tracing it is a great deal harder.
Most of the world’s biggest cryptocurrencies such as Ethereum, Tether, and of course, Bitcoin, exist on regionalized networks which utilize Blockchain tech. Blockchain is an allocated ledger which is enforced by a network of computer systems.
One of the main reasons why cryptocurrencies often tend to trade so high is because they are not issued via any central authority. This essentially means that they are almost immune to regulation and government manipulation or interference.
What Might We See from Crypto in 2024?
As we head towards the end of Q1 2024, what better time to look ahead to try to gauge some sort of idea of how the cryptocurrency market may behave for the remainder of the year.
If 2022 was a year of bear runs (in all markets, not just crypto), and 2023 was a year of volatility, could 2024 be a year of resilience for digital currency? While we, nor other market analysts and experts, don’t have crystal balls to see into the future, there are certainly signs that things could play out that way.
Here are some things that could influence crypto trading in 2024, and what we can potentially expect from the markets.
Bitcoin ETPs May Help Increase Demand
Last month, January 11 2024 to be precise, we saw the launch of the first spot Bitcoin ETPs (exchange traded products) after their approval ten years since the first spot Bitcoin ETF application was filed in the U.S.
There was a huge demand for these ETPs, as investors have been calling for years, for crypto ETFs. Inflows in the very first month surpassed $2 billion and helped to drive Bitcoin’s value up significantly, leading into February.
Despite these ETPs still being in their infancy, it’s clear that the demand is there and the belief is that they’ll provide a new, safer, regulated, more stable way for investors to gain exposure into the crypto markets through Bitcoin, without jumping in headfirst. As you know, funds are generally considered much more stable than individual shares.
Dark Clouds of a Possible Recession
When it comes to investing, and indeed, business in general, recession is never a good thing. Many business experts and market analysts have warned that the U.S may indeed enter recession in the first half of 2024.
Now, thus far, revised figures and stats have looked slightly more optimistic, but the U.S economy is still not quite out of the water yet. If the U.S does indeed enter a recession, this will likely have a knock-on effect for all markets, including crypto.
The main concern from an investment standpoint is that crypto is more volatile than, say, the S&P 500 or the Dow Jones, so any drops in price are likely to be sudden and steep. As the saying goes ‘bulls take the stairs, while bears take the window’.
It is worth noting, however, that a recession is far from certain, and even so, if it does happen it will likely be less severe than those seen in the past.
All-Time Highs?
Again, this is pure speculation, but considering the fact that Bitcoin, and crypto in general, has gotten off to such an impressive start to the year, could we see crypto reach all-time highs before the year is out?
Because Bitcoin’s ETPs proved so popular, they’ve certainly helped to drive up the price of Bitcoin over the last several weeks. Crypto generally tends to track Bitcoin, so when Bitcoin is up, crypto markets are up, and vice versa.
In November we have a Presidential Election, so whether we have a new president or not, at least the markets will know where they stand. If there’s one thing the markets like, it’s certainty. That political certainty may also drive up the price of crypto, gearing it up nicely for a Santa Claus Rally in December.
The Fed Delaying Rate Cuts May Influence Crypto
Finally, when talking about any markets, you have to talk about the FED and those pesky rate hikes.
With interest rates now sitting above 5%, investors are banking on the FED cutting interest rates. As inflation is coming down, their plan does appear to be working.
The concern, however, is that they’ll delay cutting interest rates. If this happens, or worse still, if inflation begins trending upwards again, crypto will likely see some pretty steep falls. The FED has been notoriously stubborn when it comes to cutting interest rates, and eventually, the markets may lose confidence.
Put simply, if the FED doesn’t cut interest rates in 2024, cryptocurrency will likely stagnate at best, or fall considerably at worst.
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