Staff ReporterThe crypto market started its recovery in 2023, with Bitcoin rising from $16,000 to $42,000 — a 162% increase in value. Meanwhile, Ethereum almost doubled from $1,200 to $2,200. For context, the NASDAQ Composite gained 44% during this time, the S&P 500 rose 24%, and gold was up just ~15%.
As we look ahead to 2024, there is an important factor to consider — a U.S. presidential election year. At first, this may not seem significant. However, analysis by Morningstar and Ibbotson Associates reveals an intriguing trend.
They analyzed how the S&P 500 performed during all U.S. presidential election years from 1928 to 2016. Out of the 23 election years analyzed, the S&P 500 went up in 19. It means the S&P 500 rose in about 83% of presidential election years over that period.
This study did not examine the data from the most recent election year, 2020. However, the pattern persisted as the S&P 500 index rose by 16%.
If history is any indicator, the stock market tends to perform positively during election years. It bodes well for broader market gains in 2024. And with crypto strongly correlated to stocks, election-year tailwinds could spur continued momentum.
So don’t rush to buy Bitcoin with debit card and read this post to see the full picture.
Indicators of the 2024 Bull Market
The cryptocurrency market has shown promising signs that point to the potential for a bull run in 2024. Here are some of the key indicators:
1. Crypto ETFs Acceptance
Experts have long anticipated the approval of cryptocurrency exchange-traded funds (ETFs), and it finally seems feasible. Asset management giant BlackRock has officially applied for Bitcoin and Ethereum ETFs. It’s monumental because it could open the floodgates to billions in institutional investment.
Currently, many pension funds are restricted to stocks. However, a crypto ETF would technically be classified as a stock even though the funds flow into digital assets. With SEC approval, pension funds could diversify into cryptocurrencies.
The SEC has already greenlit trading for spot bitcoin ETFs, signaling a shift in regulatory attitude.
2. Bitcoin Halving
Bitcoin halving is programmed into the network and happens every 210,000 blocks or about every four years. The subsequent division of rewards is anticipated to take place in April 2024 when the blockchain network reaches 840,000 blocks.
Halving cuts the mining rewards in half, limiting new Bitcoin creation and curbing inflation. Historically, this has catalyzed a new bull market. The BTC price prediction estimates Bitcoin could reach up to $76,592 in 2024 following the halving.
3. Continuous Bitcoin Growth
Bitcoin has already appreciated 175% in value in 2023, even amid the crypto winter. Milestones, like the NFT market surpassing $1 billion in November, are also painting an optimistic picture for crypto entering 2024.
If the dominoes fall into place with ETF approvals and the halving, the crypto market appears primed to embark on its next jaw-dropping bull run. The long-awaited ‘crypto spring’ may finally bloom in 2024.
Indicators of the 2024 Bear Market
The phenomenal rise of cryptocurrencies over the past decade has been nothing short of remarkable. However, the crypto market still faces uncertainties that could shape its trajectory in 2024. Here are some key factors that point to the possibility of a bear market this year:
1. Persistent Regulatory Uncertainty
Cryptocurrencies lack clear regulations in many jurisdictions. While some countries have formulated specific laws around digital assets, much ambiguity persists globally. Uninformed regulation, misapplication of rules, or over-regulation could negatively impact investor confidence and stifle the growth of the crypto market.
For example, the ongoing XRP lawsuit filed by the SEC has already depressed altcoin prices and reduced Bitcoin’s dominance below 50%. Similarly, Bitcoin fell from $26,688 to $25,800 in a single day ahead of a speech by Federal Reserve Chair Jerome Powell, illustrating the impact of regulatory uncertainty. The opaque regulatory environment continues to make institutional investors wary of entering the crypto space.
Unless major economies provide clarity on rules for cryptocurrencies, the uncertainty is likely to hamper broader adoption in 2024. The lack of clear guardrails raises the chances of a bear market next year.
2. Unresolved Issues
Three of the most pressing unresolved issues are environmental sustainability, scalability, and market volatility:
Environmental sustainability. Energy-intensive proof-of-work consensus mechanisms in cryptocurrencies have raised concerns regarding their environmental footprint. Environmental concerns can lead to reputational damage and regulatory scrutiny.
Scalability issues. The transaction processing speed and capacity limitations hinder the mainstream adoption of cryptocurrencies. During heightened demand, scalability problems can lead to longer transaction times and increased fees. These scalability problems pose challenges for cryptocurrencies to become viable payment methods for large volumes of transactions.
Market Volatility. Excessive price fluctuations can deter risk-averse investors and contribute to market instability. The volatile nature of cryptocurrency markets makes digital assets risky investments and hinders their use as a stable store of value. Market volatility may subside as the industry matures and cryptocurrencies become more widely adopted, but inherent features, like speculative interest and illiquidity, can sustain price fluctuations.
These issues continue to pose risks and challenges that the industry must address through technological and regulatory solutions. Overall, the developing nature of cryptocurrencies contributes to many of these open questions that will shape the development of this asset class.
Conclusion
Cryptocurrency is a relatively new investment asset compared to the S&P 500 stocks and real estate. However, it possesses significant financial potential if one pays close attention to the market indicators. Despite its issues, it looks like 2024 is the year the crypto market will go bullish.
