What aspects of the Bitcoin and cryptocurrency market should be watched in the second half of 2024?
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What aspects of the Bitcoin and cryptocurrency market should be watched in the second half of 2024?
For the remainder of 2024, the cryptocurrency market will be influenced by demand for Bitcoin and Ethereum ETFs, regulatory developments, the presidential election, and the Bitcoin halving.
Navigating Web3 tides with focused insightsBy: KYLE TORPEY
Translation: Baishuo Blockchain
Key Takeaways
Crypto bulls say bitcoin may still have room to rise, as demand for spot bitcoin ETFs and the halving effect may not yet be fully priced in.
Some industry observers believe that while there will inevitably be demand for spot Ethereum ETFs upon launch, they are unlikely to achieve the same level of success as their bitcoin counterparts.
Regulatory clarity remains a key hurdle, with investors closely watching statements from presidential candidates and recent developments for clues.
Bitcoin has climbed over 30% this year, boosted by demand for ETFs holding the leading cryptocurrency. But bitcoin prices have recently cooled, retreating from record highs reached earlier in the year.
The trend continued in recent days, with bitcoin dipping below $57,000—down from over $73,000 in March. So what lies ahead for the rest of 2024? Bullish investors say further demand for crypto-focused exchange-traded funds could push prices higher. But other issues loom as well.
1. Demand for Bitcoin and Ethereum ETFs Could Boost Cryptocurrencies
Demand related to spot bitcoin (BTC) exchange-traded funds, which began trading in January, has supported the cryptocurrency this year. Bulls believe this effect hasn't fully played out yet.
According to Farside Investors, net inflows into these new ETFs have exceeded $14.4 billion. Currently, most of the money flowing into bitcoin ETFs comes from self-directed investors, and market watchers believe further demand could emerge as financial advisors become less hesitant about recommending crypto products, potentially lifting bitcoin itself.
"We haven't seen many institutions like pensions or endowments participating in these ETFs yet," said Bloomberg Intelligence analyst James Seyffart. "To me, that means there's real potential for growth in demand."
Investors broadly expect Ethereum-based ETFs to launch this year: The Securities and Exchange Commission is expected to approve individual applications before the end of summer. This could boost demand for the cryptocurrency.
Matt Hougan, Chief Information Officer at Bitwise, estimates that Ethereum ETFs could see $15 billion in inflows within their first 18 months. Meanwhile, Seyffart expects them to attract 20% to 25% of the volume drawn by bitcoin funds in their initial months.
"We don't think Ethereum ETFs will create the same splash as bitcoin ETFs, which broke numerous records across inflows, assets, and trading volume," Seyffart told Investopedia.
Growing demand for both ETFs and bitcoin itself could mean higher prices, especially as the supply of this cryptocurrency nears its 21 million cap.
2. Elections and Other Issues to Watch
Other topics worth watching in crypto this year include:
1) Presidential Election
Donald Trump has been more explicitly supportive of cryptocurrencies during his presidency than ever before. President Joe Biden’s administration has been seen as favoring stricter regulation, although some industry observers interpret the recent decision not to sue Ethereum 2.0 as a sign of evolving views.
"I think the chances of getting 'clarity' before the election are 0%. If there's going to be a legislative framework, it won't happen until next year at the earliest," said Sarah Brennan, General Counsel at Delphi Ventures.
2) Post-Halving Effects
According to analytics firm CCData, the bitcoin halving—where the number of new bitcoins generated approximately every 10 minutes is cut in half—has historically had a positive impact on its price, lasting anywhere from 370 to 550 days.
The last halving occurred about six months ago, but unlike previous cycles, bitcoin had already surged significantly beforehand. Analysts from Deutsche Bank and JPMorgan say much of the anticipated price increase was already priced in prior to the latest halving.
While recent volatility may support this theory, bitcoin bulls believe this downturn is temporary.
"It's normal to see price declines like this after a halving—the halving is extremely bullish, but bull markets usually start months later, driven by fundamentals," Caitlin Long, founder and CEO of CustodiaBank, wrote in an X post at the end of June.
3) Mt. Gox Distributions
This week, the defunct bitcoin exchange Mt. Gox began distributing billions of dollars worth of bitcoin to former customers. This increased supply started entering the market on Friday, and its ultimate impact remains uncertain, with some viewing it as bearish while others argue the issue is overblown.
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