Markets
What to watch out for in the Bitcoin and cryptocurrency markets in the second half of 2024
Key points to remember
- Cryptocurrency proponents say bitcoin may have room to rise as demand for bitcoin spot ETFs and the effects of the halving may not have played out yet.
- Some industry observers say that while there will definitely be demand for an ether spot ETF at launch, it is unlikely to see the same level of success as bitcoin versions.
- Regulatory clarity remains a major hurdle, with investors watching presidential candidates’ statements and recent developments for clues.
Bitcoin has soared more than 30% this year, with demand for ETFs that hold the leading cryptocurrency helping to drive its price higher. But bitcoin prices have cooled recently, pulling back from record highs reached earlier this year.
That trend continued Friday, with bitcoin falling below $57,000 in late afternoon trading after surging above $73,000 in March. So what’s the outlook for the rest of 2024? Bullish investors say increased demand for cryptocurrency-focused exchange-traded funds could drive prices higher. But more trouble looms on the horizon.
Demand for Bitcoin and Ether ETFs Could Boost Crypto
Bitcoin spot demand (Bitcoin) exchange traded funds that started trading January has been supportive for the cryptocurrency this year. Bulls say that this effect has not yet taken place.
According to Farside Investors, the new ETFs have seen net inflows of more than $14.4 billion. Most of the flows into Bitcoin ETFs, which hold the currency, are currently coming from do-it-yourself investors, and market watchers believe additional demand could arrive as Financial advisors are becoming less suspicious to recommend crypto products to customers, thereby boosting bitcoin itself.
“We also don’t see a lot of institutions like pension funds or endowments getting involved in ETFs right now,” said James Seyffart, an analyst at Bloomberg Intelligence. “To me, that means there are definitely areas of potential growth in demand.”
Investors generally expect Ether-based ETFs (ETH) that are expected to hit the market this year: The Securities and Exchange Commission is expected to approve individual ETF applications by the end of the year. end of summerThis could boost demand for cryptocurrencies.
Bitwise CIO Matt Hougan estimates that Ether ETFs are expected to generate $15 billion in inflows in their first 18 months. Seyffart, meanwhile, expects them to capture 20% to 25% of what Bitcoin funds attracted in their first few months.
“We don’t think Ethereum ETFs will create as much of a stir as Bitcoin ETFs, which have broken many different records in terms of their flows, assets and trading volumes,” Seyffart told Investopedia.
Growing demand for ETFs and the underlying bitcoin could lead to higher prices, especially as the cryptocurrency’s supply approaches its 21 million cap.
Elections and other topics to watch
Other topics to watch in cryptocurrency this year include:
The presidential election. Donald Trump has declared himself more favorable cryptocurrency than it was during his presidential administration. President Joe Biden’s administration has been seen as supporting tighter regulation, although some industry observers have interpreted a Recent decision not to file suit in connection with Ethereum 2.0 as a sign of changing perspectives.
“I would say the chances of ‘clarity’ before the election are zero percent, and I think if there is a legislative framework, it will come next year at the earliest,” said Sarah Brennan, legal director at Delphi Ventures.
The Consequences of Bitcoin Halving: Bitcoin Halving— in which the amount of new bitcoins generated roughly every 10 minutes is cut in half — have historically had a positive impact on its price, according to analytics firm CCData, for periods ranging from about 370 days to nearly 550.
The last halving was about six months ago, but it differed from Analysts at Deutsche Bank and JPMorgan said much of the forecast the price increase was already integrated before the last halving.
While recent volatility may support this theory, bitcoin proponents believe the downtrend is temporary.
“It’s normal for a price drop like this to happen after a halving — halvings are incredibly bullish, but bull markets typically don’t start until months later — for fundamental reasons,” Caitlin Long, founder and CEO of CustodiaBank, said in a post on X in late June.
Mt. Gox Distributions: Mt. Gox Bitcoin Exchange Fails This week, billions of dollars in bitcoin began to be distributed to former customers this month. The ultimate effect of this increased supply, which began hit the markets on Fridayis uncertain, with some viewing it as bearish and others saying the problem is overblown.