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If 2022 was the year when cryptocurrencies almost wiped out their value, 2023 saw them recover. This is despite the upheaval of technological innovation, market fluctuations, regulatory changes, and the collapse of giants (FTX’s Sam Bankman Fried and Binance’s CZ Changpeng Chao) (pleaded guilty to breaching money laundering regulations). Bitcoin, the most popular cryptocurrency, soared by 154% in 2023. From around $17,000 at the beginning of the year, BTC has risen to his $44,000. However, much of this gain occurred in the second half of the year. The overall cryptocurrency market capitalization also increased from $831.8 billion at the beginning of the year to $1.62 trillion.
Parth Chaturvedi, Head of Investments at CoinSwitch, said: “BTC has recorded a significant price rally and is breaking through key resistance levels with healthy volume. Various narratives are influencing this price movement. Investor sentiment is definitely on the rise.” According to his CEO at ZebPay, Rahul Pagidipati, this growth can be broadly attributed to the increased interest in the crypto market by both retail and institutional investors. “Global macroeconomic factors are also contributing to this growth, as countries come together to determine the future roadmap for crypto assets through their regulatory frameworks,” Pajdhipati says.
Bitcoin in 2024
So what does 2024 hold for Bitcoin? The cryptocurrency started the year with a bang. On January 2, 2024, Bitcoin exceeded $45,000. The big question is whether prices will rise further this year. There are two main events that could push Bitcoin prices higher in 2024. One is the fourth BTC halving event, and the other is the U.S. Securities and Exchange Commission’s (SEC) decision on the U.S. spot BTC ETF.
half-life event
Bitcoin halving events occur every four years and reduce the supply of Bitcoin by half. This means that fewer Bitcoins will be available for purchase on the market afterwards. The most direct impact of Bitcoin halving on price comes down to simple supply and demand. As fewer Bitcoins become available, the price should rise, assuming demand remains constant or increases. Additionally, miners only have half the amount of Bitcoin they can sell to cover operating expenses, reducing the overall selling pressure on the market.
Past halving events and their impact on BTC price
The first halving took place on November 28, 2012, when the block reward was reduced from 50 BTC to 25 BTC. The price at the time of the halving was $13. However, the following year it reached a high of $1,152. Before the first halving, Bitcoin was unknown to most people, but when its price in dollars ballooned from double digits to over $1,000, Bitcoin made several headlines. I started decorating. The second halving occurred on July 16, 2016, reducing the block reward to 12.5 BTC. At the time of the halving, the price was $664, but the following year it peaked at $17,760. The third halving occurred on May 11, 2020, and the block reward was reduced to 6.25 BTC. At the time, the price of Bitcoin was $9,734. The following year, it hit a high of $67,549. The third halving was different in that it occurred during the 2020 coronavirus pandemic, when most of the global economy was at a standstill. Nevertheless, the BTC/USD price pattern was largely consistent with previous cycles. The next halving event will reduce the block reward from 6.25 BTC to 3.125 BTC.
Bitcoin ETFS
Another major factor that could further drive the price of Bitcoin is Bitcoin ETFs. Wealth management giants including BlackRock and Fidelity are among the 13 companies that have filed applications with the U.S. Securities and Exchange Commission. Such funds are expected to raise up to $3 billion from investors in the first few days of trading, and billions more thereafter. “The buzz surrounding the potential creation of a Bitcoin ETF in 2024 excites me. If approved, it would unleash a flood of institutional capital that could reach trillions of dollars, sending the market to new heights. This potential inflow is what makes me bullish on the crypto industry as a whole.”I see the current price movement as an early sign of this shift. ” said Minal Thukral, EVP (growth and strategy) of CoinDCX.
Rising to $100,000 in 2024?
Analysts at Standard Chartered Bank predict that Bitcoin’s value could rise to $100,000 by the end of 2024, but industry insiders have a different view. Shivam Thakral, CEO of BuyUcoin, said, “The crypto market may experience a supply shock after the Bitcoin halving, with the price of Bitcoin falling between $50,000 and $55,000 after the event. 1,000 and could reach $65,000 by the end of 2024, without considering the impact of the Bitcoin halving.” ” Thukral further added, “Predicting Bitcoin’s price in 2024 is complicated, even as the halving approaches. It is likely that this event will contribute to the current price, but its impact will be The whole picture remains uncertain.While there is a historical link between halvings and price increases, investors believe that markets absorb information efficiently and are pricing in expected events. You need to be aware that it is possible.
Factors such as market sentiment, regulatory changes and technological advances may affect results. ”
Chaturvedi said, “Past Bitcoin halving events led to a bullish market in price.The Bitcoin network’s algorithm has a built-in feature that halves miners’ rewards every 210,000 blocks. “The next halving is scheduled for around April 2024.” If the submission of a spot BTC ETF application is approved by the SEC, massive institutional demand will respond to the supply shock. These supply and demand factors, combined with lower interest rates, could push BTC prices higher, and the market already seems to be reacting to it.Rajagopal Menon, Vice President, WazirX , points out that Bitcoin rises approximately 60 days before the halving, and that a “pre-halving retrace” often occurs around the time of the halving. Investors often use this pre-halving retracement as an opportunity to reaccumulate or “build up.” However, it is also a time when some investors may exit due to impatience or disappointment at not seeing large profits immediately after the halving. After going through a halving and reaccumulation phase, Bitcoin entered a historically parabolic price increase phase. For example, several months after previous halvings, Bitcoin hit new all-time highs, with the last major peak being around $69,000 in late 2021 after the May 2020 halving. ”
However, experts also point out that the focus should be on fundamentals. “The growing interest in Bitcoin and increased participation from institutional investors could coincide with the Bitcoin halving event. 2024 will be a pivotal year for cryptocurrencies, with the next “It could set the tone for the market cycle.”
The fate of other cryptocurrencies
Bitcoin is often seen as a bellwether for the entire cryptocurrency market. Take for example Ethereum, the second most popular currency. As of December 14, 2023, it has already surpassed the $2,200 level, an increase of a whopping 80% from its trading price at the beginning of the year. Experts say Bitcoin’s performance could set the tone for the entire market. “This will be followed by a rise in Ethereum. After Bitcoin and Ethereum, attention will be focused on various altcoins in the market. During altcoin season, the prices of alternative cryptocurrencies usually spike. This phenomenon This could lead to a decline in Bitcoin’s dominance,” Menon added. .
“In the broader market, the typical cycle follows a pattern, with funds first going to BTC, increasing its market capitalization dominance, already over 50%. This is followed by funds moving towards Ethereum. Rotated into ETH, followed by a peak “bullish” at the end. The “run” is gaining momentum as capital rotates into “riskier” altcoins. We are still in the first stage of the capital turnover cycle and there is a lot of momentum in broader crypto price growth. A few token-specific things are worth highlighting. Developments are progressing as well, which will impact the price of individual tokens based on their respective stories,” Chaturvedi added.
“We have historically seen Bitcoin primarily leading the market bull run, followed by Ethereum and other altcoins, with most digital assets reaching year-to-date highs. It gives us a glimpse of the positive trends in the market in 2024,” Thakral added.
“Historically, price spikes have served as a leading indicator, causing increased developer activity and funding for new projects. This positive momentum creates a ripple effect and increases the Further, continued technological advancements such as L2 solutions and zero-knowledge proofs add further optimism. These developments could pave the way for numerous new applications. will open up and drive real recruitment in the coming years,” Thukral said.
Take a sip
Industry insiders say SIP (Systematic Investment Plan) or DCA (Dollar Cost Averaging) are widely recommended strategies for investing in volatile assets like Bitcoin. “These techniques reduce the impact of volatility because they require you to invest a fixed amount on a regular basis, regardless of market conditions. A disciplined investment approach that considers a 3-5 year time horizon is wise. However, it is essential to adjust your strategy to suit your personal risk tolerance and financial goals. ”
Parth Chaturvedi, Head of Investments at CoinSwitch, agrees, “The best way to reduce volatility risk is to invest systematically over a longer period of time using a SIP-type investment strategy.” According to the house, it is best to allocate 2-5% of your portfolio to cryptocurrencies,” agrees. helps increase risk-adjusted returns over longer time horizons. So don’t put all your eggs in one basket, diversify your allocation. ”
According to Pagidipati, it’s important to focus on the fundamentals, adding: “Historically, we have certainly seen prices turn into an uptrend after halving events. However, there is a possibility that prices could fall. We need to focus on the fundamentals and understand the underlying economics without getting carried away with the rise. Advocating diversification, Thukral said, “Although Bitcoin is a prominent player, you can manage your overall risk exposure by diversifying your portfolio. “This suggests that strong investors tend to do better.”
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