Despite many predictions, Bitcoin failed to break the
$100,000 barrier last year. However, it would be wrong to say that the previous
12 months have been bad for the sector.
Even with SEC investigations into cryptocurrency
exchanges and a general tightening of regulations, the leading cryptocurrency
grew from $16,000 to $44,000 in 2023.
Will the rally continue in 2024?
As in the traditional financial market, we need
fundamental triggers to sustain the uptrend. Fortunately, we have them.
First, there is hope that a spot BTC-ETF will be approved on
8-10 January. If it is rejected outright, issuers could sue the SEC, similar to
what Grayscale did.
Another critical factor for growth could be the
halving of Bitcoin, which will reduce the reward miners get for creating new
blocks on the blockchain.
In addition to these positive factors, we can also
consider the growth of activity on the blockchain and the rise in stock markets
following the US interest rate cut.
Analysts predict that Bitcoin
price could rise to at least $54,000 in the short term and to
$160,000 after the halving in April 2024.
What about other cryptocurrencies?
Bitcoin’s growth generally positively impacts the
altcoin market, but there is already a growing interest in the second-largest
cryptocurrency by market capitalization: Ethereum.
This is not only because of FOMO, as usual, but
because people expect Ethereum to continue leading blockchain technology
innovations in 2024 with its updated roadmap.
Another reason for Vitalik Buterin’s coin to grow
could be that investors are likely to gradually shift their profits from
Bitcoin to Ethereum as the cryptocurrency market recovers.
But where will the money come from?
First, if spot ETFs are approved, demand for bitcoins
by the funds that will hold them will increase.
Second, US households hold just under $18 trillion in
liquid assets, including cash deposits, a massive increase from the 2013 level
of $10 trillion.
The question is how much of these funds will flow into
the digital asset market. It is also possible that
if market sentiment worsens, cryptocurrency will come under pressure.
In short, the market has plenty of money; we just need
the right triggers.
What could go wrong?
The main risk for the industry is not so much the
tightening of regulations, which surprisingly accelerates the integration of
assets into the financial system but manipulations.
For example, malicious actors could try to delink
stablecoins such as USDC or USDT from the US dollar again, leading to increased
market volatility and possibly a crash.
The second major threat remains hacker attacks,
company failures, and, of course, the risk of cryptocurrency asset sales by the
US government.