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We’ve been in this bear market for a long time. It’s similar to enduring a long winter, where one must always be prepared with a hat and gloves. You find yourself wondering, “When is the sun coming out?” However, my sentiment has shifted. It is not merely the anticipation of summer or the approaching bull market. Instead, I am already wearing a T-shirt and taking off my jacket. I think there are clear signs that the bull market is already here.
2023 has been an exciting year for the industry. The combined crypto market capitalization surged nearly 93% from Jan 1, 2023’s $794 billion to $1.53 trillion as of Dec 5. As we are very close to the end of 2023, it’s time to look forward and turn our focus to the next year. In this article, I’ve collected the most important crypto events to look forward to for 2024.
In 2024, I believe there will be six different market catalysts that could serve as a crucial area of interest for market participants. They could also create new investment opportunities.
Spot Bitcoin ETF approval in the US
In Oct 2021, the US Securities and Exchange Commission (SEC) granted approval for the nation’s first BTC-based exchange-traded fund. The financial watchdog has yet to approve a spot ETF for Bitcoin in the United States, but I expect this to change soon.
On Nov 30, SEC officials met with the representatives of Grayscale, a prominent crypto asset manager seeking to convert its existing Grayscale Bitcoin Trust into an exchange-traded fund. The company won a critical court battle against the agency in August, legally forcing the latter to review its BTC ETF application.
A day earlier, there was also a formal meeting between the financial watchdog, BlackRock, and Nasdaq. The asset manager filed for a spot Bitcoin ETF at the SEC in June and a spot Ethereum ETF in November. Besides the above developments, Bloomberg Intelligence ETF analyst James Seyffart said he believes that the probability of SEC Bitcoin ETF approval early next year is around 90%. Analysts believe the approval will happen somewhere between January 8 and 10.
The market is currently optimistic, and a Bitcoin spot ETF in the US will play an essential role in onboarding institutions seeking to achieve diversified asset allocation via BTC investments.
Ethereum Dencun
Major upgrades to Ethereum’s network are often among the year’s most important events. This will be the case in 2024, when the Dencun upgrade is expected to take place in the first quarter of 2024, introducing the long-awaited proto-danksharding.
Proto-danksharding is the prototype of an iteration of danksharding technology that has been developed by Ethereum. Due to Ethereum’s limited scalability, transactions became slow and expensive during periods of heavy usage. Developers plan to utilize sharding, where the network is partitioned into smaller pieces called shards that can independently execute smart contracts and process transactions.
After the Dencun upgrade, rollup-based layer-2 chains like Arbitrum One, Optimism, and Base can add cheaper data to blocks on the Ethereum mainnet via blobs, which can be sent and attached to blocks with the data inside being inaccessible for the Ethereum Virtual Machine. With blobs and blob-carrying transactions, layer-2 chains can store and retrieve off-chain data on the Ethereum mainnet in a cost-efficient manner, making layer-2 transactions significantly cheaper after the Dencun upgrade.
Dencun will also provide other benefits for Ethereum users, including optimized block space, reduced data storage costs, improved cross-chain communication, and enhanced security via the depreciation of the SELF-DESTRUCT function.
The end of the US interest rate hike
Since early 2022, the federal funds rate has continuously increased until Q3 2023, as the Federal Reserve has attempted to combat inflation in the United States. Between January 2022 and August 2023, the effective rate increased from 0.08% to the current target rate of 5.25% and 5.5%.
With US inflation falling from a high of 9.1% in June 2022 to as low as 3.2% in October 2023, I believe the Fed’s interest rate hiking cycle is reaching its end. The market anticipates the first rate cut to occur as early as May 2024. Under this impetus, positive sentiments in the cryptocurrency industry are expected to strengthen, enhancing the appeal of Bitcoin and other digital assets.
Why does this matter to us? If we think of the various financial markets as a series of pools at different levels, at the highest level, we find the US monetary and bond market, which can be compared to the largest pool.
Currently, interest rates are high, resulting in a substantial amount of “water” in this pool. However, once interest rates are reduced, it is as if the water starts to flow toward smaller pools, such as equity and crypto. When interest rates decrease, the bond market becomes less attractive, and individuals are more inclined to invest their money in assets that offer higher risks and returns, such as crypto.
Circle IPO
Circle, the issuer of the USD Coin (USDC) stablecoin, is preparing to go public early next year via an initial public offering (IPO), according to a November 2023 report. As it will make the firm the first publicly traded company among issuers, the move is expected to support the adoption of cryptographic stablecoins.
However, this isn’t Circle’s first attempt to go public. A year ago, the stablecoin issuer terminated its agreement with special-purpose acquisition company (SPAC) Concord Acquisition Corp. The reason for the termination was reportedly due to the SEC’s lack of approval of the deal, first announced in July 2021.
Bitcoin halving
Just like major Ethereum upgrades, Bitcoin halving is among the crypto industry’s most significant developments for 2024. However, unlike ETH hard forks, these events occur roughly every four years.
The event will reduce the amount of new Bitcoin that miners can receive for each newly mined block by 50%. By cutting the new coin supply in half, Bitcoin will become more scarce and less inflationary.
With enhanced supply-demand dynamics, I expect BTC’s price to surge after the event. In fact, all previous halvings have been followed by major crypto bull runs.
FTX case nearing resolution
FTX’s founder, Sam Bankman-Fried, was found guilty of multi-billion dollar fraud in November. The approval to liquidate nearly $880 million of assets to repay creditors has been obtained as part of the resolution process. These developments indicate that FTX is gradually entering a stage where the exchange will undergo restructuring. The resolution of this matter is expected to restore some trust and regulatory clarity for investors, potentially attracting new retail funds to the industry. SEC Chair Gary Gensler indicated his willingness to consider FTX’s reboot under the condition that a new leadership takes SBF’s place and that the exchange is operated within legal boundaries. If approved by the regulator, such a restart could help increase trust in FTX or, at the very least, mitigate the negative impact of the scandal.
The road to the next crypto bull market
With the US approving BTC spot ETF, the Dencun upgrade, and other vital catalysts, we could very likely witness a Bitcoin Super Cycle in 2024. However, there are potential negative factors that could occur next year.
For instance, the now-defunct Mt.Gox exchange is expected to repay 137,000 BTC to creditors, and the US government plans to liquidate the Bitcoin stash seized in the Silk Road case. These events could introduce selling pressure and potentially lead to declining cryptocurrency prices. Additionally, the global regulatory landscape for cryptocurrencies remains uncertain, which opens the door to unforeseen events.
On the other hand, I believe that the liquidation of BTC from the Mt.Gox case and the US government’s Silk Road seizure could mark the emergence of an actual bull market. This could be accompanied by the widespread adoption of cryptocurrencies and the introduction of innovations. Whatever the future holds, it is important to “Do Your Own Research” (DYOR) and be prepared for what could potentially be the most bullish market in crypto history.
