The future looks bright for Bitcoin in 2024.
Once considered financial curiosities useful only for proof-of-concept transactions like buying pizza, Bitcoin and other cryptocurrencies are now poised to gain mainstream legitimacy. Analysts expect three major developments in 2024: A major Bitcoin milestone, dubbed “The Halvening,” is expected to make supply scarcer. they are seeing a more aggressive attempt to drive bad actors out of the industry, and large institutions are preparing ETFs for regulators’ approval.
This institutional support is one of the most important bullish factors for Bitcoin in 2024, says Will Clemente, founder of Reflexivity Research and a Bitcoin notable. “The most interesting trend throughout the year has been the rise of a US-based institutional buyer type, whereas historically the crypto market has been primarily driven by individuals (investors),” Clemente told Investor’s Business Daily.
Meanwhile, bitcoin in 2024 could become what it was always designed to be: digital currency, in all its investable and transactional glory. The big question is: will this be enough to overcome its reputation for volatility, lack of stability, and lack of stability?
1. Bitcoin Supply Halving in 2024
One of the most surefire events to catalyze bitcoin in 2024 is The Halvening, a portmanteau of “halving” and “happening.” This is when the reward for Bitcoin miners will be cut in half, or even in half, in predictable increments.
Satoshi Nakamoto, the legendary creator of the cryptocurrency, introduced the idea in the original Bitcoin white paper published in 2008. Bitcoin “miners” receive rewards for verifying their transactions, which incentivizes them to contribute to the network. But because the supply of bitcoin is fixed (a measure intended to combat inflation), this reward is halved after a set number of transactions.
This halving is expected to take place in April 2024. Clemente points to previous halving events to know what to expect in the markets. “It’s basically a sort of supply shock in the market where the total amount of supply is cut in half,” he said.
However, a lower reward creates less incentive for miners. This means adding bitcoins to the blockchain at a slower rate. Eventually, transaction fees will overtake mining as a way to profit from bitcoin. “From a raw supply and demand perspective, there is less supply in the market,” Clemente said. “Even though demand remains the same, prices are starting to rise.”
We could potentially see a repeat of Bitcoin in 2024. “We will see a similar price action after this next halving,” Clemente said.
2. Bad actors have been kicked out of crypto as regulation looms
Cryptocurrency continued to make headlines throughout 2023 as the old titans continued to fall. Changpeng Zhao has resigned as CEO of crypto exchange Binance after pleading guilty to criminal charges. In November, Sam Bankman-Fried, founder of crypto exchange FTX, was convicted of fraud by a New York federal jury. He awaits sentencing in March 2024.
Additionally, arrests and convictions followed the stunning collapse of crypto hedge fund Three Arrows Capital in 2022. The collapse triggered more instability in crypto. It also highlighted allegations that many of the biggest players in crypto are engaging in fraudulent schemes and misusing their clients’ assets.
The nature of crypto as an anonymous and irreversible payment method also opens investors to fraud and schemes.
Cryptos act like bearer bonds. Cryptographic transactions are supposed to be secure and irreversible: whoever holds the cryptocurrency key is effectively its owner. But this design meant that investors who used exchanges like FTX or hedge funds like Three Arrows lost their holdings with little recourse available.
Clemente says crypto’s reputation is likely to encourage U.S. regulation of crypto and bitcoin in 2024. “I’m in favor of regulation coming to this area…I think it’s necessary,” did he declare. “Regulations are going to continue to tighten and I think that’s positive for us to move forward and mature as an industry.”
3. American institutions dominate Bitcoin in 2024
And as in any economic system, prices rise where demand increases. US financial institutions are expected to take even bigger steps in crypto and bitcoin in 2024.
One of the most notable developments is the rise of Bitcoin ETF applications. The Securities and Exchange Commission and companies like BlackRock and Fidelity are discussing proposals for ETFs that track the price of Bitcoin. There are reportedly up to 13 companies with pending applications for bitcoin tracking ETFs, according to Reuters.
Investors looking to gain exposure to bitcoin and other cryptocurrencies will likely drive this trend in 2024. Clemente sees an increase in bitcoin trading during business hours in the United States compared to opening hours in Europe and Asia-Pacific. Meanwhile, interest in Bitcoin futures is growing on regulated exchanges like the Chicago Mercantile Exchange.
The United States, leader in Bitcoin
“The U.S. really ramped things up,” Clemente said. “BlackRock, Fidelity and some of these very large institutional firms are putting a stamp of approval (on Bitcoin), saying ‘look, we feel comfortable offering this to our clients.’ “
Institutional support could mean more stability for bitcoin in 2024 and a reduction in the trademark volatility that has hit the cryptocurrency. “They’re able to put money into the asset in a way that allows them to do it for the first time,” Clemente said.
Although the fundamental story of Bitcoin in 2024 looks promising, investors should remember that an analysis of what the actual charts are saying is of paramount importance. Look for suitable entries, avoid prolonged buying and always make sure to manage risk by avoiding big losses.
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