Significant developments expected for crypto industry in 2024

Bitcoin blasted into 2024 on a high note, touching a 21-month peak. Independent Newspapers.

Bitcoin blasted into 2024 on a high note, touching a 21-month peak. Independent Newspapers.

Published Jan 20, 2024


Bitcoin blasted into 2024 on a high note, touching a 21-month peak following the groundbreaking approval of spot exchange-traded funds (ETFs) for Bitcoin, according to Luno’s South Africa country manager Christo de Wit.

This comes after the US Securities and Exchange Commission (SEC) approved the Bitcoin ETFs, causing the world’s most popular cryptocurrency to hit the highest it has ever been since April 2022. The approval could lead to a rise in global adoption of Bitcoin. The spot exchange was granted after more than a decade of rejections.

A spot Bitcoin ETF is described as an investment fund that tracks the price of Bitcoin directly.

According to reports, following the approval, the Bitcoin ETFs have bagged about $900 million (R17.15 billion) in the first three days of trading.

De Wit said Bitcoin ETFs are significant as they open the way for greater institutional investment and adoption.

“In 2017, we had initial coin offerings. In 2020, we had NFTs. The next bull run will also likely have a catalyst, a lightning rod for its popularity, and it’s likely to be the spot ETF.

“Bitcoin ETFs are expected to pave the way for institutional investors to invest in Bitcoin through a recognised traditional financial institution. As the US SEC has now approved the first Bitcoin spot exchange-traded fund, it will likely begin an influx of institutional investment,” he said.

De Wit said judging by the popularity of ETFs in traditional markets, more retail investors are also likely to dip their toes in crypto, making it a more easily accessible asset.

“Over the past year, the Bitcoin spot trading volumes on exchanges around the world jumped as investors reacted positively to signs that approval of the applications brought by crypto and traditional asset managers became more likely.

“In the last few years, we’ve seen the price of Bitcoin and other cryptocurrencies go up and then pull back. And while past performance doesn’t always guide future returns, Bitcoin began 2024 on a high note, touching a 21-month peak and having gained 190% in the past year,” said De Wit.

According to De Wit, the approval of Bitcoin ETFs and the resulting potential for greater institutional investment is another clear signal that crypto is maturing.

“There is a perceived positive shift in how cryptocurrencies are being viewed by traditional investment institutions,” he said.

Meanwhile, Binance CEO Richard Teng said the approval marked a historic chapter in the industry.

“The approval illustrates a new level of acceptance, maturity, and mainstreaming of the crypto market, providing the industry with more credibility and potential for further innovation.

“Bitcoin ETFs will provide easier access to the crypto market, attracting more investors and liquidity. While it is not easy to anticipate the scale of new entrants and market dynamics (which are subject to market dynamics), it is useful to note that the introduction of Gold ETFs in 2004 led to seven years of positive price action after that. Coupled with the Bitcoin Halving event this year, these events could provide a dynamic market for Bitcoin,” he said.

Teng said the ETFs provided a low-cost and familiar mechanism for mainstream users to gain easy access to crypto investments.

“The Bitcoin spot ETF will bring added credibility to the digital asset industry, furthering the foundations of trust in the market for a wider audience.

“Direct investment in Bitcoin and various regulated instruments will co-exist, enabling diverse investment strategies and catering to various risk profiles and preferences. This signals an exciting new era of adoption and legitimacy, not just for Bitcoin but also for the broader crypto space.

“We look forward to other milestones we anticipate in the coming weeks and months, including the upcoming Bitcoin halving, expectations of an Ethereum ETF, and more,” he said.

Ethereum ETF is a financial product designed to track the price of Ethereum.

De Wit also unpacked a few significant developments anticipated for crypto this year.

Bitcoin halving

According to De Wit, while price history was not an indication of future price movements, the Bitcoin halving is one of the events on the crypto calendar that investors follow very closely. The next halving is expected in April 2024.

“Roughly every four years, Bitcoin rewards paid to miners are cut in half as a way to avoid flooding the market. These events are known as Bitcoin halvings, and each event has historically had a major impact on the price as they decrease the supply of new Bitcoin into the market.

“After the first halving, Bitcoin increased more than 8 000%. After the second halving in 2016, Bitcoin jumped roughly 3 000%. The last halving in 2020 was followed by a bull run that ended in an all-time high price of almost $69 000 (current price is $43 109),” he said.

US elections

He said the outcome of the US election in November 2024 could have profound implications for the crypto industry.

“A crypto-friendly administration might foster regulatory frameworks, encouraging innovation while providing clarity and legitimacy to the industry.

“US regulatory and financial decisions tend to have a marked impact on the global crypto industry, and increasingly, government officials are playing into crypto for voter support,” De Wit said.

Head of product marketing at Luno, James Ovenden, said that crypto began to enter the conversation during the last US elections. “Several senators and congresspeople, even outsider presidential candidates, are avowed crypto supporters, and more crypto talk could herald a more positive approach to crypto.”

De Wit said: “We continue to see signs that crypto is maturing. The crypto industry is still in its early phase and additional use cases will continue to come to the fore. In 2024, we’ll continue to track the innovative ways crypto will continue to shake up the traditional financial system“.