Our experts talked about the sources of new capital in the cryptocurrency market. And the trends shaping the demand for cryptocurrency
The interest of users in the cryptocurrency market and the demand for cryptoassets are driven by both global expected events and new trends. Our experts told us what exactly could trigger capital inflows into bitcoin and other cryptocurrencies in 2024.
Halving and new highs
In 2024, one of the most anticipated events for the crypto industry will take place – bitcoin halving. This term refers to the halving of payments to miners – members of the cryptocommunity who mine cryptocurrency.
Halving is a planned halving of the number of newly issued bitcoins that are created and distributed to miners who perform verification and validation of transactions on the network. The procedure is embedded in bitcoin’s program code to ensure that the total number of coins in the network never exceeds 21 million units.
Bitcoin halving occurs about once every four years. The event reduces the inflow of coins to the market by half. But the demand for them at the same time remains unchanged. As a result, there is a shortage of bitcoins, which pushes the cryptocurrency’s rate up. Statistics show that bitcoin updates the absolute maximum value about a year and a half after halving. That is, theoretically, the new peak of the rate will be reached in 2025.
But there are speculations according to which the maximum, contrary to history, can also be registered in 2024. The reason is the likely launch of spot bitcoin-ETFs in the US. The battle of market participants for the approval of the instrument has been going on since 2013. With its appearance, institutional investors’ money may flow into the crypto industry.
New capital sources
The year 2024 has several prerequisites to become favorable for the cryptocurrency market. First, investors are full of positive expectations due to hopes of approval of a bitcoin-ETF by the U.S. Securities and Exchange Commission (SEC). Market participants expect the emergence of a bitcoin-linked exchange traded fund. And that will push asset managers from the world of traditional finance to embrace cryptocurrencies as another tool to diversify portfolios. This will encourage capital to flow into the cryptocurrency market.
Secondly, we can expect to see continued growth in interest in Ordinals, which are now available not only on the bitcoin network. But also in other blockchains. This gaining popularity, which was born in the bitcoin blockchain, is now spreading to other networks as well.
The interest in the new standard also facilitates the flow of capital into the crypto market and contributes to its growth. Above all, the positive impact stimulates interest in bitcoin. And whose blockchain has become the progenitor of the “ordinals”.
The year 2024 could also be a watershed year for the NFT market as a whole. And which has long been dominated by networks such as Ethereum or Solana. In November 2023, the volume of NFT trades in the bitcoin network exceeded that of Ethereum. And this was made possible by the emergence of Ordinals. This will probably be one of the major trends for the NFT market in 2024 – the flow of capital and users to the bitcoin network.
The third trend in 2024 will be the boom of ecosystems and so-called Layer 2 applications. These are focused on infrastructure creation and development of blockchain tokenomics. It is worth paying attention to the DePIN concept. The emergence of new concepts and applications like these. It could help stimulate adoption and demand for cryptocurrency by a wide range of users.
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