By Terry Ashton, updated October 18, 2024
As we move into the last quarter of 2024, crypto investors are feeling a mix of excitement and uncertainty. The year started with a positive vibe, but the market has remained flat lately, especially when compared to the booming US stock market. However, several encouraging factors suggest that the cryptocurrency market might bounce back soon.
One of the most significant drivers for the digital asset market has been positive regulatory changes. According to Armani Baktyary, a research analyst at Messari, “Recent positive actions regarding cryptocurrencies worldwide—like the rulings on XRP and GBTC lawsuits, plus the historic approval of 11 spot bitcoin ETFs in the US—have been crucial for market support.”
A recent highlight was the SEC’s approval of Ethereum spot ETFs, which pushed ETH, the second-largest cryptocurrency, to new heights. However, the ETFs have yet to start trading, causing a temporary dip in ETH prices. Investors are hopeful that, once trading begins, ETH might experience a surge similar to Bitcoin’s previous performance.
Another positive signal for the crypto market is a shift in monetary policy from the US Federal Reserve. Baktyary notes that “The Fed’s decision to stop raising interest rates could lead to good outcomes for all markets, including cryptocurrencies.” Current indicators suggest that the Fed may pause rate hikes and possibly even lower rates later in the year. This is crucial because lower interest rates typically mean more money in circulation, which can boost spending and investments.
The combination of increased money flow and fewer low-risk investment options may push investors towards riskier assets like cryptocurrencies and stocks, potentially driving up prices.
Additionally, Baktyary points out that 2024 is a US election year, which often prompts incumbents to take positive actions for the markets to support their election bids.
Another exciting development is the fruition of investments made during the last bull market. Many crypto teams have been hard at work over the past two to three years, preparing for upcoming launches, building on the significant capital they received during the bull run of 2021.
With favorable monetary policies, election dynamics, positive regulations, and the maturation of various crypto projects, 2024 looks promising for cryptocurrencies.
Will Bitcoin’s Price Rise Again in 2024?
Bitcoin started 2024 strong, thanks to several encouraging events that boosted investor confidence. The approval of multiple spot bitcoin ETFs, including one managed by BlackRock, marks a key moment for Bitcoin and its acceptance among institutional investors.
“New ETFs, especially BlackRock’s, have already outperformed other launches, making it one of the most successful ETF introductions after Gold,” Baktyary states. Following these approvals, Bitcoin’s price soared past its previous all-time high, reaching over $73,000.
Another significant event to watch is the ‘halving’ of Bitcoin, which happened on April 20. This process cuts the reward for mining Bitcoin from 6.25 to 3.125 per block, historically leading to price increases due to the reduced supply.
Moreover, a favorable outlook for the US markets can also positively affect Bitcoin prices. When the stock market performs well, investors tend to take on more risk, possibly channeling funds into Bitcoin and other cryptocurrencies.
Is a Crypto Crash on the Horizon?
After the digital asset market peaked at over $3 trillion in late 2021, it dropped over 70% in 2022, settling at $850 billion. This decline aligns with past market corrections. While the future remains uncertain, the previous year has been promising for crypto, with many currencies, including Bitcoin and Ethereum, experiencing significant gains.
Current US economic data shows declining inflation, hinting at potential interest rate cuts later in 2024. Although the future is unpredictable, several factors indicate that 2024 could be a better year for digital assets compared to 2023, which was already strong compared to the preceding bear market.
Cryptocurrencies to Watch in 2024
As the crypto landscape evolves, several projects stand out for their innovative strategies and growth potential:
1. Immutable X (IMX)
This platform has gained attention in blockchain gaming, an area Baktyary considers highly promising due to significant funding. Its partnership with Polygon has allowed them to dominate around 80% of the blockchain gaming market. With partnerships including Amazon Web Services and Ubisoft, Immutable X is establishing itself as a key player in the gaming sector.
2. Polygon (MATIC/POL)
Known for its versatile technology, Polygon has adopted the Chain Development Kit, enhancing its infrastructure. Its new Polygon 2.0 update adds a multi-layered structure that includes a Staking Layer, allowing validators to earn rewards. Polygon is also at the forefront of zero-knowledge technology, improving privacy and efficiency.
3. Optimism (OP)
Optimism has made strides in stack adoption, second only to Polygon. Its collaboration with Coinbase reinforces its credibility and extends its reach. Optimism is also advancing in zero-knowledge technology, enhancing its offerings and market position.
4. EigenLayer
EigenLayer is gaining attention for its innovative Actively Validated Services technology, which can enhance various applications in the blockchain ecosystem. Its ability to share validator security among networks could improve scalability and security in the Ethereum space.
Should You Invest in Crypto Now?
Many investors are pondering whether now is the right time to jump into crypto. The favorable developments for Bitcoin, including the ETF approvals and a positive economic outlook, paint an optimistic picture for the cryptocurrency market.
With many innovative projects and strategic partnerships emerging, the market is showing signs of maturity and growth. However, it’s essential to approach crypto investments cautiously. This market is still developing, and changes in regulations or technology can significantly impact it.
While the potential for high returns exists, there’s also a risk of losses. Investors should conduct thorough research, understand the market’s risks, and consider their own risk tolerance before investing.
For those looking at long-term strategies, current conditions, along with technological advancements and clearer regulations, could present good investment opportunities. The involvement of major financial institutions adds credibility to the crypto market and may indicate a trend toward more stable growth.
In conclusion, while the crypto landscape is promising, careful consideration and ongoing research are vital for navigating this dynamic investment environment.
