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4 Cryptocurrency Predictions for 2024

4 Cryptocurrency Predictions for 2024

If you think Wall Street has had a phenomenal year, take a closer look at how the cryptocurrency space has performed in 2023. As of the early morning hours of December 28, the overall value of all listed cryptocurrencies cryptocurrencies on CoinMarketCap.com is up 115% year to date.

Although there are thousands and thousands of digital currencies to choose from, it is Bitcoin (CRYPTO:BTC) And Ethereum who did most of the work. By the end of 2022, Bitcoin and Ethereum collectively accounted for 58% of crypto’s $795 billion market cap. As of December 28, these two heavyweights were responsible for 67% of the aforementioned $1.71 trillion crypto market value.

But it’s not so much about where digital currencies are, but rather where they’re headed next. After an exceptionally positive year, here are four cryptocurrency predictions for 2024.

4 Cryptocurrency Predictions for 2024

Image source: Getty Images.

1. “Buy the rumor, sell the news” will be the theme of Bitcoin in 2024

There are a number of reasons why Bitcoin has surged over 160% in 2023. This includes positive sentiment in major US financial markets, belief that a spot Bitcoin exchange-traded fund (ETF) will be approved by the Securities and Exchange Commission (SEC). ) in January, and the wait for the Bitcoin “halving” event, which is expected to take place in April 2024.

THE the last two catalysts were particularly important. Financial institutions have tried for years to gain approval for the listing of a Bitcoin ETF, but were rejected by regulators who claimed the crypto space was rife with manipulation. A handful of approved Bitcoin ETFs would allow greater access to the best crypto token through more standard channels (i.e. without having to purchase Bitcoin on a crypto exchange).

Similarly, the Bitcoin halving will reduce the block reward given to cryptocurrency miners by 50%. Bitcoin has a habit of rallying on halving events because it results in a daily reduction in issued tokens.

However, Bitcoin has already surged over 160% following the rumor that these events would occur in 2024. This has all the hallmarks of a “buy the rumor, sell the news” year for the largest cryptocurrency by capitalization stock market.

To add, Bitcoin continues to fail in the relevance department. El Salvador’s experiment with Bitcoin as a viable currency simply did not resonate with its residents. Based on over $7 billion in remittances transferred to El Salvador from abroad in 2022, only $126 million was sent to cryptocurrency wallets.

As I’ve long said, Bitcoin’s competitive advantages have diminished, with other projects leaving its network and utility in the dust.

2. Ultra-popular “dog” currencies will continue to underperform

My second prediction is that the ultra-popular “dog” coins – I’m talking Dogecoin (CRYPTO:DOGE) And Shiba Inu (CRYPTO: SHIB) – will continue to underperform the overall crypto market. In 2023, Dogecoin and Shiba Inu tokens gained 35% and 36%, respectively. Although this represents a better year-to-date return than the benchmark S&P500that’s well below the over 160% gain noted for Bitcoin.

The main problem with Dogecoin and Shiba Inu is that they are nothing more than payment coins. There are thousands of digital currencies that could, in theory, be used to pay for goods and services. The two dog-inspired pieces simply offer nothing in terms of differentiation from countless other projects.

Usage data also confirms that Dogecoin and Shiba Inu lack real-world utility. Online business directory Cryptwerk notes that around 2,500 companies accept DOGE tokens and around 900 companies accept SHIB coins as payment. It is estimated that there are 333 million businesses worldwide. The wild volatility often associated with meme coins has forced almost all but a tiny percentage of companies to turn away from Dogecoin and Shiba Inu.

Investors should also be aware of payment coins’ checkered history following gigantic increases in value. With few exceptions (e.g., Bitcoin), coins that increase by 10,000% or more typically lose 90% or more of their value in the following years. Although both DOGE and SHIB tokens have reached this 90% retracement threshold, there is simply no reason for their valuations to remain where they are currently.

With nothing more than enthusiastic banter on social media holding back the valuations of DOGE and SHIB, I would expect another underperforming year for both “dog” coins.

3. Once again, the cryptocurrency market fails to dissociate itself from Wall Street.

For years, the cryptocurrency space has been hailed as a turning point for investors. The expectation of increased adoption of digital payments, coupled with the growing use of smart contracts – protocols that facilitate, verify and strengthen the negotiation of a contract – appears to offer investors a way to take advantage of innovations in tip which are not available. This is not related to the performance of the US/global economy or the stock market.

My third prediction for 2024 is that digital currencies will once again fail to decouple themselves from the stock market. In other words, the performance of benchmark indices, such as the S&P 500, will ultimately determine how the crypto market performs.

Although investors would like to believe that the cryptocurrency market is a completely different entity from Wall Street, many of the same factors that guide Wall Street’s well-being are important for digital currencies.

For example, access to capital is essential. Most asset classes soared in 2021 because interest rates were near historic lows and the federal government provided fiscal stimulus to eligible individuals and families.

However, history suggests that access to capital may be more difficult in the new year. Banks have deliberately tightened their lending standards, and the U.S. money supply is contracting significantly for the first time since the Great Depression. A few key indicators with a strong track record of predicting declines in the U.S. economy and stock market suggest that 2024 could bring another bear market.

Without exceptionally With strong positive investor sentiment, it will be incredibly difficult, if not impossible, for digital currencies to break away from Wall Street’s performance in 2024.

A blue street sign that says "Take future risks."A blue street sign that says "Take future risks."

Image source: Getty Images.

4. The crypto space will experience another major failure

The fourth and final cryptocurrency prediction for 2024 is that we will see another revolutionary failure.

In 2022, Terra Classic (CRYPTO: LUNCH) (formerly known as “Terra”) and TerraClassicUSD (CRYPTO: USTC) were the disasters of the crypto space. As of May 2022, TerraClassicUSD is the fourth largest stablecoin by market capitalization, with Terra Classic being the fourth largest digital currency by market capitalization. However, things moved quickly.

Unlike most stablecoins, which use fiat currencies to maintain their peg to the US dollar, TerraClassicUSD relies on an algorithm. A large group of USTC sellers decoupled this peg, which created an arbitrage opportunity that ultimately led to a cascading effect on the Terra stablecoin and Terra itself.

Shortly after this epic collapse, we witnessed the fraud occurring on crypto exchange FTX. Less than a year after FTX filed for bankruptcy protection, its former CEO, Sam Bankman-Fried, was found guilty of seven counts of fraud and conspiracy against him. The former FTX CEO faces up to 110 years in prison, with a looming sentencing date at the end of March.

The crypto market lacks adequate oversight and has historically been a breeding ground for manipulation, which is precisely why the SEC has been hesitant to approve a Bitcoin ETF.

For example, the SEC charged Global Coinbase (NASDAQ:COIN) and Kraken for operating as unregistered securities exchanges in 2023. These lawsuits threaten the core operations of both companies, which could result in hefty fines and threaten the future growth or viability of both companies.

There has also been speculation that the largest stablecoin by market capitalization, Attached (CRYPTO:USDT), could eventually become unanchored from the dollar and fail. Tether has repeatedly failed to open its books and disclose precisely which assets support its $91 billion stablecoin. After seeing a handful of other stablecoins fail to maintain their peg to the US dollar, Tether’s fall could be crypto’s black swan event of 2024.

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Sean Williams has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Bitcoin, Coinbase Global, Ethereum, and Terra Luna Classic. The Motley Fool has a disclosure policy.

4 Cryptocurrency Predictions for 2024 was originally published by The Motley Fool

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