Crypto

What will the crypto asset market look like in 2024? Looking back at 2023 and unravelling the future -.

2023/12/18Editors of Iolite

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Will there be a ‘reinstatement’ of crypto assets?

Will there be a ‘reinstatement’ of crypto assets?

Until 2022, the crypto asset market was said to be in a winter period. However, 2023 has been a strong year, particularly for bitcoin, with many crypto assets reaching new highs since the beginning of the year in November.

The situation has indeed turned into a tailwind, and we explore the background and future trends, using bitcoin as an example.

The crypto asset market has thawed

The crypto asset market has been exposed to negative events, such as Russia's invasion of Ukraine in February 2022, the massive crash of the stablecoin TerraUSD in May and the collapse of the major crypto asset exchange FTX in November.

For bitcoin, the price fell from 5.61 million yen in April to 2.16 million yen at the end of the year, less than half the price, and similar price movements were formed for other crypto assets.

The same year was a winter period for crypto assets. In 2023, however, the situation changed dramatically, and not only did the snow melt, but there was also a significant tailwind.

Let's look back at the trends so far, using bitcoin's price movements as an example.

Markets begin to show signs of a reversal

First, in January, the US dollar strengthened and interest rates in the US were suppressed, and in late January it was reported that Amazon was entering the blockchain and NFT gaming business.

NFT games are games that allow players to earn NFT-enabled items by playing them, which can then be bought and sold on marketplaces.

The news that a GAFAM is entering the Web 3.0 space was also positive for the crypto asset market, with the bitcoin price rising to about 3.1 million on 30 January.

The rise also factored in negative events.

On 9 March, the voluntary liquidation of the US Silvergate Bank, which has many transactions with safe asset-related companies, and the announcement of losses by major miner Riot caused a sharp fall, but as soon as the failure of Silicon Valley Bank, where some collateral for the stable coin USDC was deposited, was announced the following day, bitcoin became a source of capital flight, with bank stocks in particular slumping. The price of bitcoin was also boosted by a slump in share prices, particularly of bank stocks, and a fall in interest rates on government bonds, which had been bought as a safe-haven asset.

Hopes for approval of a physical bitcoin ETF

From mid- to end-June, the price rose significantly from 3.51 million to 4.39 million. Behind this is the application for a bitcoin physical ETF by several companies in the US.

Although ETFs linked to bitcoin futures prices have been approved and listed in the past, the SEC (US Securities and Exchange Commission) has not allowed the listing of physical ETFs from the perspective of investor protection and has rejected all previous applications.

However, as mentioned earlier, the SEC has decided that the bitcoin futures market is adequately regulated, and has approved bitcoin futures ETFs, and there are growing indications that it will take a similar view with regard to physical ETFs.

Also among the firms that had submitted applications for physical ETFs by the end of August were major investment firms such as BlackRock and Fidelity.

Of these, BlackRock has received approval for more than 98% of the ETFs it has applied for in the past, and this is thought to have spurred expectations and influenced price movements.

Geopolitical risks also had a limited impact.

In mid-August, rising global interest rates, including rising yields on US Treasuries, as well as the application by China's major property company, China Hengda Group, to the New York Federal Bankruptcy Court for Chapter 15 protection, which allows foreign companies to preserve assets held in the US, led to a temporary decline in the market.

The price also fell on 7 October due to the outbreak of the Palestinian-Israeli conflict, but reversed upwards in mid-October when it was reported that the SEC had approved a physical bitcoin ETF.

The price recovered to the 5.52 million level in early November. The future outlook is also positive.

Most expect bitcoin to reach its half-life around April 2024 and, as in the past, will be a factor in price increases. Above all, the approval and listing of physical ETFs will increase demand for bitcoin and further rightward movement is expected.

Such a move would also have a positive impact on altcoins. In particular, with regard to Ethereum, six Ethereum futures ETFs began trading in October.

Although there are many reports of a lack of excitement, this could turn into a reality depending on the needs of investors who want to include crypto assets in their portfolios.

As geopolitical risks increase, the price movement of the Zipangu coin, which aims to be linked to the gold price, can also be expected.

Thus, the crypto asset market between now and 2024 is a situation where positives abound. Why not invest in assets after gathering and scrutinising information?

Stocks with high expectations for 2024 and why

Having been with the crypto asset market for a long time, the editorial team will be keeping a close eye on the following stocks in 2024.

Bitcoin.

The 2.17 million yen level at the beginning of the year was surpassed by 5 million yen in late October, and as of early November it had reached its highest level since the beginning of the year.

So far, expectations of approval for a physical bitcoin ETF have been a boosting factor, but actual approval would increase demand for bitcoin, and the half-life scheduled to occur around April 2024 could also cause prices to rise, as in the past.

Ethereum or Zipangu coin

Six Ethereum futures ETFs began trading in October. Although there has not been much excitement, demand is expected from investors who want to include crypto assets in their portfolios using ETFs.

Zipangu Coin (ZPG), which aims to be linked to gold, is also expected to see a price rise as geopolitical risks rise, such as the situation in Russia-Ukraine and the Middle East.