Like the market in general, Bitcoin has had a strong end to 2023 after trading in a tight range for most of the year. If today were the last day of 2023, the digital asset king would have recovered nearly 150%, its best year since 2020, when it surged a whopping 305%.
With just a little over two weeks to go until the end of December, I thought now would be the perfect time to share my top five Bitcoin and cryptocurrency predictions for 2024. As a reminder, these are my personal predictions and do not reflect the expectations of global US investors.
The launch of a Bitcoin spot ETF in the US will lead to a revaluation of prices.
Nothing is guaranteed in life, but the launch of a Bitcoin ETF in the U.S. now appears imminent. Bloomberg Intelligence estimates the odds of the fund being approved by the Securities and Exchange Commission (SEC) by Jan. 10 at 90%. We could see a series of Bitcoin ETF launches in January — as many as 10, according to Bloomberg estimates.
How will this impact the price of the underlying asset? Spot Bitcoin ETFs are available in other markets, including Canada and Europe, but it’s worth noting that the United States accounts for about 60% of the total global stock market value. One data analytics firm says that demand generated by spot ETFs could push the price of Bitcoin to between $50,000 and $73,000. Some readers will find this estimate too conservative.
It may be worth reviewing what happened to the price of gold — Bitcoin’s analog cousin — after the launch of the first gold ETF in the United States, the SPDR Gold Equities (GLD). Prior to the launch of GLD and the iShares Gold-Backed Trust (IAU), investors were limited to physical bullion (which can be expensive to transport and store) and the futures market (which may not be suitable for every investor). When it debuted in November 2004, GLD increased overall demand for gold by reducing the direct costs associated with investing in the metal and making it accessible to a broader investor base.
Since then, the price of gold has risen by about 360%.
As I write this, it’s also possible that an Ethereum ETF could be available for trading in 2024. The SEC is expected to rule in May on two specific applications from VanEck and Ark/21Shares. Unlike Bitcoin, Ether is not a commodity, but I believe that such an ETF would also boost demand for cryptocurrencies.
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Small miners will struggle to survive after the halving event.
As many of you know, Bitcoin is programmed to have a limited supply. The maximum number of coins that will ever exist is 21 million, and every four years, the digital asset undergoes an event called a halving. The next halving is expected to take place in April 2024, after which the mining reward will be reduced by 50%, from 6.25 BTC per block to 3.125 BTC.
This is a double-edged sword. Historically, Bitcoin has risen in price directly before and after previous halving events as investors act on the reminder that supply is severely constrained.
On the other hand, smaller mining companies are likely to struggle to survive as the difficulty rate continues to rise and mining rewards are halved. Late last month, cryptocurrency mining companies Hat8 and USBitcoin completed their merger, and I expect to see additional business deals as the industry tries to adjust to this new era of mining difficulty.
3- The $84 trillion wealth transfer will greatly benefit digital assets
The world is about to witness the largest transfer of wealth in human history. Over the next two decades, members of the Silent Generation (those born before 1946) and the Baby Boomer Generation (1946–1964) will leave their heirs an estimated $84.4 trillion, with the Millennial Generation (1981–1996) the primary beneficiaries.
This will have a number of major implications, but as Blockchain Galaxy reminds us, millennials and younger generations “have a higher preference for cryptocurrencies” than their parents and grandparents. Members of this group are not only “digital natives,” but they have also lived through a series of financial setbacks (the Great Recession, high inflation, and restrictive borrowing costs) that, in many cases, have shaken their confidence in traditional financial institutions and assets. A 2022 Investopedia survey found that millennials as a whole were more likely to invest in crypto than in stocks, mutual funds, ETFs, commodities, and real estate.
“The transfer of wealth from older generations into the hands of these crypto-friendly heirs is likely to lead to greater inflows into Bitcoin and broader digital asset classes,” says Charles Yu of Galaxy.
The ordinary system in Bitcoin is strongly supported by NFTs. The fourth scenario is the return of
Non-fungible tokens, or NFTs, have lost much of their cache since the 2021-2022 bull run. Many of these digital assets, permanently registered on the Ethereum blockchain, are used to trade millions of dollars. However, today, an estimated 95% of NFTs are “worthless,” according to Dab Gamble.
Non-fungible tokens, or NFTs, have lost much of their cache since the 2021-2022 bull run. Many of these digital assets, permanently registered on the Ethereum blockchain, are used to trade millions of dollars. Today, however, an estimated 95% of NFTs are “worthless,” according to Dab Gamble.
Is the market ready for an NFT renaissance? I think so, although the Bitcoin network has quickly become the preferred platform for them. Just a year ago this week, people began recording text, images, and other media on the Bitcoin network, and by May, the Bitcoin blockchain was reported to be the second most popular NFT platform after Ethereum.
Ordinals, as NFTs are called on the Bitcoin network, now account for more than half of all daily Bitcoin transactions, and trading volumes recently reached a new record high, rising to $36 million on December 12.
Bitcoin miners will continue to be good stewards of energy resources.
Bitcoin mining is often criticized for its energy consumption, but most of that energy comes from renewable sources like hydropower, wind, and solar. Furthermore, in the first half of 2023, the global Bitcoin network used just 0.21% of the world’s energy, a negligible amount, according to the Bitcoin Mining Council (BMC).
Another important development is the use of stranded gas, a by-product of oil and gas operations, which is used in mining to prevent waste and reduce carbon and methane emissions. This approach is financially beneficial to mining companies, as it generates more revenue than selling gas at market prices. It can also help with compliance with regulations that limit gas flaring.
On a final note, the excess heat generated by Bitcoin mining can be recycled, as the Digital Technologies Cell in Lachute, Quebec, does. The heat generated by its Bitcoin operations is used to heat a nearby facility, a swimming pool manufacturer with a total area of about 200,000 square feet.
