Markets
Crypto Market Forecast for May 2024 – Forbes Advisor
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Bitcoin has retreated from all-time highs and other top cryptocurrencies have struggled as investors aren’t getting the bitcoin halving they want.
Investors have flocked to Bitcoin and other cryptocurrencies in recent months after the launch of the first Bitcoin spot exchange-traded fund in January. However, optimism surrounding the imminent launch of the first Ethereum spot ETFs has faded in recent weeks.
Additionally, crypto investors are increasingly concerned about a potential slowdown in the U.S. economy as inflation remains stubbornly stubborn while GDP growth fell sharply in the first quarter.
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Crypto Market Performance in April
Influx to a new spot Bitcoin ETF pushed Bitcoin prices to new all-time highs above $73,000 in March. However, Bitcoin prices have pulled back from their April highs. They ended the month slightly above $60,000.
Similarly, after hitting $4,092 in March, Ethereum prices ended April just below $3,000 as investors continue to hope that Bitcoin ETF spot approval will open soon the door to approval of Ethereum spot ETFs by the United States. Security and Exchange Commission.
Although bitcoin prices fell more than 8% in April, they are still up about 50% year to date. Ethereum prices also fell more than 8% during the month, but are up around 40% in 2024 so far.
The largest spot Bitcoin ETF by assets under management, the Grayscale Bitcoin Trust ETF (GBTC), was down 11% in April. However, this was caused by investor concerns over the annual cost of this particular fund, not any nervousness over strategic cryptocurrency issues or macroeconomic trends.
Among the 10 largest cryptocurrencies by market capitalization, Toncoin (TON) was the best performer in April with a 5% gain. Avalanche (AVAX) was the worst performer with a 37% decline.
Bitcoin Halving Completed
The Bitcoin network has completed its last halving event on April 19. Every 210,000 additional transaction blocks are added to the Bitcoin blockchain, the network automatically undergoes a halving, during which the reward Bitcoin miners receive for validating a transaction block is cut in half .
Bitcoin Halving reduce the supply of new BTC created. Historically, bitcoin prices bottomed about a year before the halving and continue to rally for about a year after the halving.
The latest halving of block 840,000 in the Bitcoin blockchain was the fourth halving in the Bitcoin network since the crypto’s launch in 2009. The halving reduced by half the number of rewards Bitcoin miners receive for verifying a single block of transactions from 6.25 BTC to 3.125 BTC. .
Launch of Bitcoin runes
Bitcoin’s latest halving also coincided with the launch of Bitcoin Runes, a new protocol that will allow crypto enthusiasts to create and trade. coins on the Bitcoin blockchain. Meme coins are a subset of cryptocurrencies typically created as satire and intended to pay homage to internet culture.
Bitcoin Runes was developed by Casey Rodarmor, who previously created and launched Bitcoin Ordinals in 2023. Bitcoin Ordinals has effectively brought non-fungible tokens, or NFT, to the Bitcoin network for the first time. The popularity of NFT trading on the Ethereum network and other blockchains has exploded in recent years.
Unlike NFTs, which are all unique, Bitcoin Runes allow the creation of identical and interchangeable fungible tokens, much like different $1 bills.
The Bitcoin Runes market has very low liquidity and has demonstrated extreme price volatility following its launch. By the end of April, more than two-thirds of runes were in the red and critics slammed the protocol for its role in increasing Bitcoin transaction fees.
Spotting Ethereum ETFs?
VanEck, ARK Investment Management and seven other companies have filed applications with the SEC to launch Ethereum spot ETFs in the United States.
The first decision deadline for the Ethereum ETF is May 23 for the VanEck app. This should be followed by the deadline for decisions on applications to the KRG, May 24. Unfortunately, candidates have reported that recent meetings with the SEC have been discouraging. Sources familiar with the matter suggest that the SEC will likely reject the first wave of Ethereum ETF spot applications.
The SEC approved the first batch of Ethereum futures ETFs in October 2023, giving investors hope that an Ethereum spot ETF could be coming soon. Ethereum futures ETFs hold futures contractswhereas a spot Ethereum ETF would directly hold the ETH cryptocurrency.
The SEC may wish to observe the performance of Ethereum futures ETFs and Bitcoin spot ETFs for an extended period of time before allowing Ethereum spot ETFs.
More regulatory issues ahead
Meanwhile, regulators continued their crackdown on the crypto market in April:
- On April 24, the U.S. Department of Justice filed charges against the co-founders of Samourai Wallet for their alleged role in money laundering over $100 million.
- After the SEC sent Consensys Software a notice to Wells in early April warning the company of impending enforcement action, Consensys filed a lawsuit against the SEC in response, challenging the regulator’s authority over Ethereum.
- On April 10, cryptocurrency exchange Uniswap Labs also revealed that it had received a Wells Notice from the SEC, informing the exchange that the regulator planned to recommend legal action against it.
James Davies, co-founder and chief product officer at Crypto Valley Exchange, says the SEC’s actions against Samourai, Consensys and Uniswap have had much more impact in recent weeks than the bitcoin halving.
“Bitcoin’s halving was largely priced in, and people were expecting Runes to launch (the latter clearly being a buy info, sell event situation), but these moves by the regulator American were not as telegraphed and will have much broader impacts on the industry,” says Davies.
However, Davies also claims that Ripple and other crypto projects and platforms targeted by regulators will continue to fight back in court.
“Importantly, Ripple’s apparent success in fighting the SEC in court has encouraged other projects to do the same, and we expect countersuits to set the stage for court battles that will define the industry in the future,” Davies said.
Other Crypto Securities
On April 5, a New York jury sided with the SEC in its lawsuit against Terraform Labs and the company’s former CEO, Do Kwon.
The jury found that the South Korean entrepreneur and his company defrauded investors by misleading them about the stability of the stablecoin TerraUSD before its collapse in 2022, which wiped out $40 billion in value.
The Grayscale Bitcoin Trust ETF continues to experience large outflows as investors dump GBTC shares in favor of spot bitcoin ETFs with a more investor-friendly fee structure.
As of mid-April, investors had withdrawn more than $16 billion from the GBTC fund since its conversion to an ETF on January 11. During the same period, the 10 competing bitcoin spot funds saw more than $29 billion in net inflows.
Upcoming Crypto Catalysts
Anthony Rousseau, head of brokerage solutions at TradeStation Group, says crypto investors can expect more volatility in May due to the ongoing regulatory crackdown on crypto.
“I believe the DOJ, the SEC and this administration continue to attack the industry and will take every step possible to slow adoption,” Rousseau said.
However, Rousseau says the crypto train has apparently already left the station and it will be difficult for regulators to slow it down.
“The pace of attacks on this industry has not stopped and adoption continues regardless [for] these events, which is incredible.
Additionally, the coming weeks could be a critical milestone for the US economy. Investors tend to sell stocks, cryptocurrencies and other risky assets when they anticipate future economic weakness.
In April, the Labor Department reported consumer price index, or CPI, rose 3.5% year-over-year in March. That’s up from February’s 3.2% year-over-year gain and higher than the 3.4% growth economists had expected.
A few days later, the Commerce Department reported U.S. GDP growth of just 1.6% year-over-year in the first quarter, down from 3.6% growth in the fourth quarter and well below 2.4%. % growth expected by economists.
John Glover, chief investment officer at Ledn, says crypto investors will pay close attention to US economic data and monetary policy.
“The key to the price performance of Bitcoin (a strong indicator of all cryptocurrencies) in May will be the release of data from the United States, with all eyes on inflation data,” Glover said.
“Additional attention will be paid to the SEC and whether [SEC Chair Gary] Gensler succumbs to pressure to allow a spot ETH ETF in the US »