The Web 3.0 industry has emerged from the "cryptocurrency winter" and spring has arrived. This year will be extremely important for the growth of the industry. In order to see the future of the industry, in this special feature, the editorial department will list noteworthy events for each month of the year from their own perspective.
In the second half of 2023, cryptocurrency prices rose across the board, especially Bitcoin. Expectations that a Bitcoin spot ETF, a long-cherished wish of the industry, may be born in the United States led to a large inflow of funds.
In addition, Bitcoin's halving will occur in 2024. Until now, Bitcoin's price has risen significantly in response to halvings, and 2024 could be said to be a foothold for that. With these expectations overlapping, the cryptocurrency market has escaped the so-called "cryptocurrency winter" and is now about to enter spring.
At the time of writing, 11 Bitcoin spot ETFs have been approved in the United States, and Bitcoin prices temporarily rose to about $49,000, the highest since December 2021. Since the approval, there has been a lull due to actual selling, but there is still plenty of room for an upswing depending on other factors in store in 2024.
In addition to Bitcoin spot ETFs and the halving, another event that could affect the cryptocurrency market is the US presidential election, which takes place once every four years. The US presidential election is an important event that will determine the future of the world, and it will naturally have some impact on the stock market.
If the stock market is affected, it is likely that the cryptocurrency market will also be affected. Furthermore, if there is a change of government, there is a possibility that the attitude towards Web 3.0 will also reverse. Therefore, it can be said that it is an event to keep an eye on in the Web 3.0 field.
In addition, 2024 will be a year of major turning point in Japan. The cryptocurrency tax system, which has been gradually relaxed as the industry's long-term efforts have borne fruit, is expected to be partially relaxed in 2024. The tax reform is directly linked to the development of the cryptocurrency market in Japan and, by extension, the Web 3.0 industry itself.
Now that momentum is building, we hope that discussions will accelerate and a future-oriented framework will be created.
And as one year has passed since the revised Fund Settlement Act came into effect, expectations are high for the emergence of Japanese yen stablecoins. Last year was the preparation stage for issuance, but this year, the movement will finally accelerate and the phase will come into actual shape.
Competition among companies will intensify, and it is not difficult to imagine a battle for supremacy in stablecoins in 2024. In addition, the revised Payment Services Act, which allows stablecoins issued overseas, may also lead to the development of the industry.
When domestic cryptocurrency exchanges actually start handling such stablecoins, the domestic Web 3.0 field will likely enter the next phase.
As such, 2024 is expected to be a year of great developments in many areas. Therefore, this time, the editorial department has compiled a unique perspective on events to watch and predictions that may occur each month over the past year. We hope you will check for yourself what kind of changes are coming in 2024.
On January 11th, Japan time, the US SEC approved a total of 11 Bitcoin spot ETFs. The deadline for review has been extended many times, citing the need for strengthened monitoring of surveillance sharing agreements and fraudulent price manipulation, but it is clear that this approval will attract funds from institutional investors, and the cryptocurrency market, including Bitcoin, will move toward maturity.
The direction of the market in 2024 is expected to be positive due to the impact of this spot ETF approval and the Bitcoin halving. The next Bitcoin halving is scheduled for March-April. After the three previous halvings, the all-time high was updated about 16 months later, so it can be said that the halving has a strong impact on the price.
The future of Bitcoin, which has also been likened to digital gold, may be guided by the price trend after the approval of a gold ETF. However, while gold has the characteristic that it is not easy to trade in physical form, in the extreme case of Bitcoin, you can hold as much physical Bitcoin as you want as long as you have a wallet.
Which way will wallet management, one of the major barriers to holding cryptocurrencies, affect? Also, looking at past trends, attention will be focused on whether altcoins will be approved as spot ETFs, and funds are expected to start flowing.
It is a little disappointing that Bitcoin and other altcoins, which were expected to revolutionize existing finance, will be effectively absorbed into existing finance by being approved as spot ETFs, but 2024 may see a large divide, including in terms of price, between altcoins that manage to get spot ETF approval and those that do not.
▶POINT
Bitcoin is eyeing its all-time high in the spring and summer of 2025. Will 2024 be a turbulent year for altcoins?
At the time of writing, the plan to convene the regular Diet session on January 26th has been finalized. Policy discussions will begin over the next 150 days until June 23rd. The Diet is expected to discuss a variety of issues, including the FY2024 budget proposal, and this will likely include tax reforms for crypto assets.
Since the term Web 3.0 became widespread and was incorporated into national policies, the review of the crypto asset tax system for companies has accelerated. The government and ruling party have decided to relax requirements for the second consecutive year from the end of 2022, and there are high hopes for tax reforms for individuals.
However, at this point in time, there has been no significant progress in the revision of the crypto asset tax system for individuals, and it is highly likely that it will take some time to realize this. In this regular Diet session, discussions will likely begin first on the crypto asset tax system for companies and regulatory aspects regarding IEOs, etc.
In addition, there are high hopes for the revision of the leverage trading ratio for crypto assets submitted by a self-regulatory organization this year. The revision of the leverage ratio could trigger an increase in trading activity, so we will need to keep a close eye on developments.
▶POINT
First, we need to establish a foothold with tax reforms aimed at corporations. We would also like to lay the groundwork for discussions on the tax system for individuals and for revisions to the leverage ratio.
In July 2023, the US policy interest rate was raised to 5.25%, the highest level in 22 years.
At present, looking at the FOMC dot chart, the market is predicting a rate cut in September 2024, and although many people are predicting a total cut of 0.75 points, the average time for a rate cut in the past has been around 7 months after the last rate hike or after the rate was kept unchanged, so if the conventional wisdom holds, there is still a possibility that the rate cut will begin around March 2024.
It is said that the recent monetary easing has caused funds that have flooded the market to flow into alternatives, including Bitcoin, but if the Fed cuts interest rates in March, there is a possibility that further funds will flow into the cryptocurrency market, just like the stock market.
One thing to be concerned about is that if interest rates are cut and the dollar weakens and the yen strengthens, the value of dollar-pegged stablecoins may temporarily decrease against the yen.
In November 2023, SBI Holdings partnered with Circle, a US company that operates USD Coin (USDC). If this creates an environment in which USDC can be traded against the Japanese yen on an order book basis at its subsidiary SBI VC Trade, it could be used as one of the asset defense measures in the event of a strong yen and a weak dollar.
▶POINT
We are wary of the risk of an economic downturn caused by interest rate cuts and the movement of the dollar/yen exchange rate. We will need to keep a close eye on the movement of funds into risk assets.
Bitcoin, which has been around for 15 years since its creation, is expected to undergo its fourth halving in about four years between March and April this year.
The halving halves the mining rewards of miners who approve Bitcoin transactions. This reduces the number of new coins issued in the market, limiting the supply and increasing scarcity. This halving will halve the mining reward from 6.25 BTC to 3.125 BTC.
It is said that the halving will be a factor in the future rise in Bitcoin prices, but this is not necessarily a positive event. As the halving will halve the mining reward, there is a risk that miners will no longer be able to make a profit.
If this happens, miners will either go out of business or sell large amounts of Bitcoin they hold to raise funds. At that time, the market price may fluctuate wildly, which is expected to trigger a temporary price slump.
Similar signs were seen during the previous halving, with the Bitcoin price remaining flat for about three to four months. On the other hand, Bitcoin's price has risen slowly after all previous halvings.
And when the next halving occurs, the price will be several times higher than the previous halving, which is one of the reasons for the rise in Bitcoin. In fact, when the third halving occurred in May 2020, the Bitcoin price was about 900,000 yen in Japanese yen, but at the time of writing this article, it is fluctuating around 6.2 million yen.
Therefore, although there may be temporary price fluctuations this time as well, it may be necessary to keep an eye on it in the long term.
▶POINT
Although prices tend to stagnate for a while after the halving, it should be noted that they tend to rise in the long term.
As one of the initiatives at the Osaka-Kansai Expo scheduled to be held in April 2025, the dual-system wallet app "EXPO 2025 Digital Wallet" will be used, which uses a server and blockchain-based data management method.
The app is already available for download, and users can experience the "use, save, collect, and connect" functions.
Specifically, in addition to stamp rallies using SBT (Soulbound Token) related to the Expo outside the venue, digital proof of event participation, and incentives that can be received by holding the participation proof SBT, "Myakupe! (electronic money)" and "Myakupo! (points)" are currently envisioned.
"Myakupo!" and "Myakupe!" are expected to be available on a trial basis from May 2024, and there is a possibility that the wallet app will be promoted on a large scale. If wallet apps are accepted in real life, this could be a step forward in terms of the spread of wallets, which are said to hold the key to mass adoption of Web 3.0.
▶POINT
The biggest opportunity for Web 3.0 penetration. Depending on the promotion, it could even have the same market share as major domestic payment apps.
The revised Payment Services Act came into effect on June 1, 2023. A year later, it is expected that a legally compliant Japanese yen stablecoin will finally appear around June this year. In 2023, preparations for the stablecoin battle for dominance were steadily progressing, mainly among major companies, and it has been sublimated into an important keyword for 2024.
With the arrival of the Japanese yen stablecoin, it is expected that it will not only improve the efficiency of payments between companies, but also increase its use in various situations between individuals. In addition, the revision of the law will allow businesses that have acquired electronic payment instruments trading business to trade existing legal currency-backed stablecoins other than the Japanese yen, including Tether (USDT), so we can expect further revitalization of cryptocurrency trading.
In the stablecoin field, Progmat, Inc., which operates the stablecoin issuance and management platform "Progmat Coin," is currently making its presence known. ProgmaCoin is a platform that is also used for issuing and managing security tokens for real estate, etc., and is intended for use by a wide range of clients, including financial institutions and private companies.
Many companies are already using ProgmaCoin, and there are also moves to issue stablecoins together with Progma in the future. Notable developments include collaboration with JPYC, a pioneer of Japanese yen stablecoins in Japan, and a partnership with Binance Japan, the Japanese subsidiary of major cryptocurrency exchange Binance.
With other initiatives underway by various businesses, 2024 is expected to be the "first year of stablecoins" in Japan, with a lot of activity.
▶POINT
The battle for dominance over stablecoins in Japan is in full swing. For the time being, attention will be focused on Progma’s actions.
In April 2023, the European Parliament passed the MiCA (Market in Crypto Assets) Regulation. The purpose is to unify the rules related to crypto assets that are not regulated by current EU law in the EU zone and protect users and investors. This will allow crypto asset-related businesses to operate in the EU zone with a single license.
After approval as official EU law, ESMA, the EU securities regulator, is expected to create detailed guidance. The implementation schedule is that the rules on stablecoins, including the broad meaning, will be implemented in July 2024, and the travel rule and other requirements will be implemented in January 2025, with the implementation being gradual.
The regulations that will be implemented this time include provisions regarding stablecoin issuers holding sufficient backing assets and risk disclosure. We hope that this will lead to the spread of stablecoins and the movement to utilize crypto assets in the EU zone.
However, it is said that the regulations do not address crypto asset lending, DeFi, or NFT, and it is likely that it will take some time before common legal regulations are enacted in the EU zone.
▶POINT
As regulations surrounding stablecoins progress, a turning point toward their use may come this year.
August may be another challenging month for the cryptocurrency market. August is known as the "summer slump" because of the summer holidays and other factors that lead to small price movements and a decrease in trading participants. Perhaps related to this, August is also a time when cryptocurrency markets continue to see sluggish price movements.
According to data from cryptocurrency analysis company Coinglass, the month with the worst performance on average in Bitcoin trading is September. From 2013 to 2023, there were only three cases of an increase in September. On the other hand, August was the second month with four increases, and the median rate of increase/decrease was the worst at minus 7.49%, surpassing the minus 5.58% in September.
There are various possible reasons for this, but the main reason is thought to be the decrease in trading volume, as in the stock market. It is thought that the movement to temporarily close positions has accelerated due to concerns that the decrease in trading volume and the thinning of order book will lead to increased volatility.
However, this year, depending on the Fed's actions, there is a possibility that the jinx could be broken. The US policy interest rate tends to cut interest rates on average about seven months after the last rate hike or hold. Some say that the rate cuts may begin around September.
This magazine predicts a gradual rate cut starting in March, but if the rate cuts begin in September, there is a high possibility that Fed Chairman Powell will express some thoughts at the economic symposium, commonly known as the Jackson Hole Conference, scheduled for August. If that happens, it is possible that funds will flow into cryptocurrencies such as Bitcoin.
▶POINT
August is a bad month for cryptocurrencies, but the words and actions of Fed Chairman Powell could move things in a positive direction.
In October 2022, Elon Musk, who had acquired Twitter at the time, tweeted, "Buying Twitter is an accelerator to create X, the all-purpose app 'everything app X'."
Time passed, and in July 2023, Twitter and the blue bird logo were abolished. The brand was officially changed to "X". And finally, it was announced that the function to transfer money between individuals will be launched in January 2024. Although the specific date has not been specified, it is certainly a focus of attention.
Originally, Elon Musk, who was also the co-founder of the payment giant PayPal, used his extensive knowledge of the payment field to apply for a financial services-related license from the regulatory authorities immediately after acquiring Twitter. It is expected that payment app users have completed basic KYC, so there is even a possibility that they will progress from online payments to cryptocurrency wallets.
Although Musk has mentioned that there are no plans to support cryptocurrencies at the moment, PayPal, which was mentioned earlier, is also said to have been born from the belief that "financial freedom between individuals should not be restricted by the state," and this, combined with the similarity to the idea of P2P payments such as Bitcoin, gives the impression that this is not just a dream.
To give an idea of it, it is like Mercari, which achieved 1 million accounts in 7 months after its release. It is said that 80% of the 1 million accounts are new cryptocurrency users, which shows how effective it is to attract users who have completed KYC.
It is much easier to move fish from online payments to the pond of cryptocurrency payments than to attract users from scratch. If it develops into a cryptocurrency wallet after establishing itself as a payment app, it will likely evolve into a more extreme, all-purpose app.
▶POINT
Although there is currently a negative reaction to cryptocurrency support in payment functions, there is continued hope for its future implementation.
In 2023, "tokenization of real-world assets (RWA)" stood out as the next hot topic in the Web 3.0 field. RWA refers to assets that actually exist in the real world, such as real estate, stocks, bonds, and artworks.
By using blockchain to tokenize these assets, various benefits can be enjoyed. For example, transactions can be accelerated, fees can be reduced, and tokenization makes it possible to hold and trade small amounts.
In addition, by being issued on the blockchain, past transaction history can be permanently recorded, and it becomes easier to ensure the transparency of transactions. It can be said that it is truly a new era of asset with many possibilities.
In general, it is said that tokenization of RWA will greatly contribute to the growth of DeFi, but at this time, there is a balance with regulatory aspects, and it is unclear to what extent it will lead to market expansion. However, by utilizing DeFi, it has the advantage of making it easier for individuals and companies to raise funds than ever before and to conduct seamless transactions, so we hope to see future developments.
▶POINT
RWAs have many benefits, but first regulations must be put in place. They are attracting attention as a new-age asset with great potential.
The US presidential election is coming up on November 5, 2024. In a poll released last November, one year before the vote, former President Trump was ahead in five of the six states with large populations where the results of the vote are expected to have a major impact on the election.
At this point, the Republican candidate has not been decided, so I would like to give both positive and negative scenarios for the cryptocurrency field.
A positive scenario would be that Florida Governor DeSantis, who is still competing for the Republican nomination, is selected as the candidate, and with the change in the system, SEC Chairman Gensler resigns ahead of his term in 2026.
Miami Mayor Francis Suarez has announced that he will receive 100% of his salary in Bitcoin from 2021, and this is because DeSantis and the entire state of Florida are showing a favorable attitude toward cryptocurrencies.
A negative scenario would be that former President Trump is selected as the candidate, fails to get a majority, and returns to the presidency with a somewhat twisted Congress. Trump has promoted the "America First" policy, and the Nasdaq has reached an all-time high during his term as president, but he tends to dislike things that could threaten the dollar, such as cryptocurrencies.
Depending on the outcome of the presidential election, the center of cryptocurrency in the United States may shift to Africa or other regions after the end of 2024. According to analysis company Chainalysis, cryptocurrency trading is active in Nigeria and Kenya, and the penetration rate of P2P trading is high when weighted by purchasing power and population.
▶POINT
The US presidential election, which also has an impact on the global economy, could have a major impact on crypto assets.
There are many positive factors for Bitcoin in 2024, so many people are predicting a significant price increase.
Matrixport, a cryptocurrency service company, has reported that Bitcoin prices will rise to around $63,000 by April and reach $125,000 by the end of the year. At the time of writing, $125,000 is about 18.15 million yen. Bitwise, a cryptocurrency investment company, also predicts that Bitcoin prices will exceed $80,000 and reach a new all-time high. On top of that, they are bullish, saying that 2024 will be the year when cryptocurrencies become mainstream.
Traditional financial institutions also have a bright outlook for Bitcoin.
Standard Chartered Bank, a major British financial institution, said that Bitcoin is likely to reach $100,000 by the end of this year. It also pointed out that due to the approval of a Bitcoin spot ETF and the impact of the halving, it could reach $200,000 by the end of 2025. This is equivalent to 29 million yen in Japanese yen.
There are also many other predictions that it will exceed 10 million yen in Japanese yen. It's not certain that everything will be smooth sailing, but 2024 may be an exciting year to follow the price trend.
▶POINT
Every year, there are many predictions that Bitcoin's price will rise, but expectations are high in 2024 due to a combination of favorable factors.
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