The Bitcoin market has been dealing with severe upheaval over the past two years, dealing with the issues brought on by the bear market and crypto winter of 2022. While many investors hoped that digital gold would be fully recovered in 2023, the data shows that the recovery has been impacted by periods of stagnation brought on by both internal and external strife. Regulatory pressures, as well as the collapse of several crypto exchanges in high-profile cases that made the news, caused the market to gain a reputation for heightened risk that kept many new potential investors away and caused those who have been trading for years to keep their assets close.
However, starting in October, BTC has been gaining strength again. Investors are looking into how to buy Bitcoin again to create the right conditions for portfolio consolidation before the values get out of hand. By then, it will be almost impossible to keep buying, and new purchases become unsustainable for most traders. Despite this, you might have heard that the following year will be the best in the history of cryptocurrencies and that Bitcoin will perform exceptionally well, perhaps managing to surpass its all-time highs of 2021. Let’s have a closer look at the possible events that might unfold in 2024.
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ETF approval
An ETF approval has been one of the hottest topics in the crypto market over the past few months. That’s because if the SEC agrees to approve Bitcoin-backed exchange-traded funds, it could propel the price further than ever. So far, the decision has been postponed several times. Many were expecting a definitive ruling in the last month of December, but it seems now that an answer is much more likely to arrive sometime during the first quarter of 2024.
However, that also means a possible approval is roughly a month away. Most believe that trading will commence soon after the announcement. So far, only the positive aspects have been highlighted, leading some analysts to believe that this has led investors to be overly optimistic and underestimate the possible issues. The main concern is that the demand might be so big that the issuers cannot meet the requirements.
Regulated places might have this issue, but since crypto ETFs are a completely new asset class, it’s impossible to tell how they will behave. The possibility of low inflows is another, more serious one, but here, too, investors cannot be sure how likely it is that it will happen. The basis trade is another possible issue arising from an ETF approval. This strategy refers to taking advantage of the different values of the Bitcoin spot price and that of the Bitcoin futures contracts.
There will be a monumental upswing in both, with the potential for profit being at least 20%. Institutions will also get increased exposure to Bitcoin as part of its spot exchange-traded fund product, narrowing the basis and decreasing profitability.
Bitcoin dominance
BTC is the king of the crypto space, the first virtual coin to appear on the market and the blueprint for all the altcoins that followed. Over the years, many analysts predicted that other coins would record more gains, causing Bitcoin to fall. However, that has never happened, and after its performance in 2023, it seems much less likely that any altcoin will ever succeed in stealing Bitcoin’s crown.
As a general rule, however, several altcoins start growing whenever Bitcoin drops, even for a little while. Recently, BTC recorded a slight downtrend, causing Solana and Avalanche to record a bullish run. The momentum was reached after BTC didn’t manage to consolidate at $45,000, a place of resistance since December 5th. The BTC market dominance underwent a tiny pullback, going from 53.95% to 53.17%. While that might not be a huge difference, it still signifies a change in how the market operates.
Investors use technical analysis to measure the potential of a specific scenario. In this sense, the combination of Bitcoin dropping from its dominant place even slightly and range-bound trading in the BTC space are signs that altcoin prices might soon break. Many believe that the reversal is the direct result of comments made by Jerome Powell, Chair of the Federal Reserve, that were hinting at interest rate cuts in 2024, of which there might be at least three. However, since an ETF approval is anticipated for Q1 2024, the general sentiment has remained positive.
Derivatives market
Bitcoin has been recording considerable growth and amassing gains throughout 2023. Back in January, the coin started consolidating right away after the abysmal performance of November and December 2022, when the values were very low. Back then, Bitcoin had lost roughly 70% of its initial value. Now, this appears to be in the past, and most investors are convinced that in 2024, the price will climb to $80,000, if not higher, managing to climb to the ever-elusive $100K.
It’s not just the possibility of ETFs being approved but also the fact that the next halving will occur sometime around April 2024. Historically, this event has always been marked by price growth both before and after the halving. The elevated prices remain constant for a while, with the most significant gains recorded around twelve months after halving. That means that 2025 is set to be a good year for crypto as well.
At the moment, some investors are disappointed that Bitcoin failed to gain the $45,000 level, but the derivatives market is showing investors that they have plenty of reasons to remain optimistic. It’s important to remember that the last time the BTC price was in the $40K range was April 2022, not long before they started to drop in July. This has led some investors and researchers to question whether a correction to the $41,000 level is possible.
While this isn’t entirely out of the realm of possibility, as fast growth is usually followed by losses that even out the gains, many are not convinced, believing this is just a momentary event and that Bitcoin will continue to grow.
If you’ve started trading, you have probably heard that Bitcoin will have a stellar year in 2024. That is very likely given all the data amassed so far, so looking after your holdings and avoiding unnecessary selling is essential to see more revenue.