- Cryptocurrencies surge in 2024, led by Bitcoin surpassing $45,000.
- Upcoming halving expectations boost industry.
- Bitcoin's rise above $45,000 fuels cryptocurrency growth in 2024.
2024 has just begun and the cryptocurrency sector is already energized, especially as Bitcoin, the preeminent cryptocurrency, surpassed the $45,000 threshold, for the first time since April 2022. This rise is driven by expectations of possible support for exchange-traded spot bitcoin funds. .
Bitcoin recently hit a 21-month peak of US$45,922, recording a notable 156% growth over last year and the most significant since 2020. Although its current price is above US$45,500, it has yet to regain its all-time high. of 69,000 US dollars. set in November 2021. At the same time, Ethereum, which is ranked second in the cryptocurrency market, saw a 1.2% increase to $2,386.50, demonstrating a 91% increase in 2023.
Commentators both inside and outside the cryptocurrency world have said CNBC They expect Bitcoin's upward trajectory to continue.
Overcoming past challenges: the journey of the cryptocurrency sector
2022 marked a period of instability for Bitcoin, plagued by notable crashes, liquidity issues, and bankruptcies in the sector. All of that came to a head with the collapse of FTX, a major cryptocurrency exchange, leading to its bankruptcy. The following year, 2023, he witnessed the conviction of FTX founder Sam Bankman-Fried on numerous federal criminal charges in the United States. Similarly, Binance's Changpeng Zhao admitted to criminal charges. resign as CEO after a costly $4.3 billion settlement with the United States Department of Justice.
With these important legal cases concluded, cryptocurrency industry leaders see this year as an opportunity to make progress and distance themselves from the misdeeds of these industry figureheads.
Mirroring Bitcoin's price movements, cryptocurrency stocks saw a rally. In particular, Riot Platforms, Marathon Digital and CleanSpark posted increases ranging between 7% and 10%, recovering from a sharp decline in late 2023. MicroStrategy, dedicated to investing in software and Bitcoin, enjoyed a 13% increase .4%, parallel to 7.8%. % growth in the ProShares Bitcoin Strategy ETF, linked to Bitcoin futures. The investment community is eagerly awaiting the SEC's decision to authorize a Bitcoin spot ETF, which could significantly expand the market and attract considerable investments.
Despite having rejected several Bitcoin spot ETF applications in the past, citing concerns about market manipulation, the SEC has shown signs of potentially approving some of the 13 proposed ETFs, with a decision expected in early January.
Matteo Greco, an analyst at Fineqia International, anticipates a positive approval and believes there could be a temporary drop in prices before another increase. He notes that an approved spot Bitcoin ETF would significantly improve market liquidity by attracting new investors.
The prospect of major central banks cutting interest rates this year is also seen as beneficial for cryptocurrencies as it will help dispel negative sentiment following the collapse of FTX and other cryptocurrency companies in 2022.
The cryptocurrency market could see further growth in 2024 as Bitcoin has historically performed well in US election years and has aligned with Bitcoin halving cycles. Markus Thielen, founder of 10x Research, observes this pattern and looks at the halving cycles in 2012, 2016, and 2020.
Industry experts are predicting a new bull market in cryptocurrencies, primarily based on the upcoming Bitcoin halving and the possible US approval of a Bitcoin ETF.
The halving event, which occurs every four years according to the Bitcoin code, reduces the rewards for mining Bitcoin in half, limiting the total supply of Bitcoin to 21 million. Historically, these halving events have caused an increase in the price of Bitcoin.
Additionally, the possible SEC approval of a Bitcoin ETF is generating excitement. This would allow investors to track the price of Bitcoin through a financial product, without directly purchasing or holding the digital currency. The industry hopes this will attract a wider range of investors, especially large institutional ones.
Mining in the spotlight: adapting to the bitcoin halving event
Cointelegraph reports that major Bitcoin mining companies are emphasizing the need for operational efficiency to remain profitable after the next halving event in 2024. Opinions from several mining companies indicate that the expected impact of the Bitcoin halving on the industry will be significant, particularly with regards to operational strategies of miners at different scales.
The Bitcoin protocol requires a mining reward reduction every 210,000 blocks, which occurs approximately every four years. Industry leaders have noted that the effect of the halving is highly dependent on the market price of Bitcoin, influencing the operational status of numerous mining operations.
A key strategy these leaders have highlighted is prioritizing keeping mining machines online to maximize the profitability of mining fleets. It has been observed that the success of mining operations depends on the balance between the total exposure to terahash and the efficiency of the hardware used.
A bright start to 2024 for Bitcoin and the world of cryptocurrencies. (Source โ X).
Despite the possibility of some miners stopping operations due to the halving, there is a consensus in the industry that the Bitcoin protocol, with its adaptive nature, ensures the sustainability of mining activities. As some miners leave, the network's algorithm adjusts, reallocating block rewards to active participants and thus maintaining the balance of the mining ecosystem.
It has also been noted that larger mining operators are likely to continue expanding their operations, supporting the broader network. This expansion is expected to potentially produce profits, especially if there is an increase in the price of Bitcoin after the halving.
Industry experts have suggested that the mining ecosystem is well equipped to handle the impact of the halving without significant disruptions. The mining difficulty adjustment mechanism built into the Bitcoin protocol is critical to ensuring continued participation by miners. If mining becomes less profitable for a segment of miners, they could deactivate their equipment, reducing the overall hash rate. This would trigger a difficulty adjustment, making mining more viable for the remaining miners.
Furthermore, the introduction of Bitcoin Ordinals in 2023 and its effect on transaction fees and developer activity have been highlighted as positive developments. Coupled with the increasing scarcity of Bitcoin after the halving, there is a strong sentiment that 2024 could remain a profitable and sustainable year for Bitcoin mining.
A look into the future: predictions and expectations for cryptocurrencies in 2024
Despite past challenges, the cryptocurrency industry, centered around Bitcoin, is showing signs of a strong resurgence in early 2024. The impending halving event, along with potential regulatory approvals and strategic adaptations within the mining sector, sets the stage for what is widely anticipated. It will be an important year for Bitcoin and the cryptocurrency market in general.
