2024 will undoubtedly be a major year for the cryptocurrency landscape as Bitcoin’s long-awaited ETF speculation reaches fever pitch and a much anticipated halving event looms, but neither will be anywhere as effective as investors may be expecting without a conducive regulatory framework surrounding digital assets.
With many crypto commentators anticipating a fresh all-time high Bitcoin value above $100,000, it’s clear that the year ahead will be make-or-break for lots of investors.
“It feels that [2023]was a year to get ready for the bull run that is yet to come. But the sentiment is very hopeful for [2024] and 25,” explained Pascal Gauthier, CEO of Ledger, in a recent CNBC interview.
The Arrival of a Watershed Year
As asset managers continue to update SEC filings in anticipation of the approval and launch of spot Bitcoin exchange-traded funds, Reuters had reported that approval may be imminent in what could be a watershed moment throughout the industry.
However, this wasn’t the only piece of good news for investors to hang on to. Bitcoin’s long-awaited halving event, scheduled for April 2024, comes with great expectations of a continuing trend that sees BTC reach a fresh all-time high value amidst a seismic bull run.
As illustrated by Bitcoin’s Stock-to-Flow Model, halvings operate on an approximate four-year cycle in which BTC awarded to miners halves to boost scarcity as a deflationary measure.
In the wake of the most recent Bitcoin halving event, which took place in May 2020, the cryptocurrency rallied to a series of fresh all-time high values in 2021, topping out at $69,044.77 on November 10th.
While the impact of Bitcoin’s halving events have steadily weakened throughout the coin’s lifecycle, many investors expect the upcoming event to spark a rally to a fresh all-time high over the months that follow April.
Early Warnings
The combination of an SEC approval for BlackRock’s Bitcoin ETF and Bitcoin’s halving event has been enough to see speculative investors buying into BTC in impressive volumes throughout the final quarter of 2023, but January brought a timely reminder that regulators will continue to have the final say on digital asset performance.
Despite more than 150% growth year-over-year for Bitcoin, the news that crypto investment services provider Matrixport expected the US Securities and Exchange Commission to reject all Bitcoin ETF applications in January prompted a sharp 8% decline for the asset.
“SEC Chair Gensler is not embracing crypto in the U.S., and it might even be a very long shot to expect that he would vote to approve bitcoin spot ETFs,” read a note published by Matrixport.
Despite many investors banking on the approval of Bitcoin ETFs, there’s little concrete evidence that a positive outcome is assured.
Regulators to Influence Crypto in 2024
While the regulatory outlook for 2024 has been mixed among market commentators, it appears clear that regulators will have a seismic say in the direction that the crypto landscape takes over the course of the year.
“As we step into the new year, analysts expect to see a surge in regulatory clampdowns in the crypto space,” notes Julius Mutunkei, reporter at Crypto.News. “The rules will expand to cover anti-money laundering and counter-terrorist financing risks, the conduct of companies operating in the crypto space, and supervisory actions concerning token sales.”
The high-profile collapse of FTX in late 2022 caused widespread damage to the reputation of the cryptocurrency ecosystem, and reaffirmed the importance of a healthy regulatory balance required in taking digital assets towards more mainstream acceptance.
Last year saw a strong reaction among regulators on a global scale. Binance was hit with a $4 billion settlement along with major lawsuits against crypto companies, while overseas regulators have been busy pushing formal laws.
In addition to this, East Asia’s approach to cryptocurrency regulation has seen markets become more volatile amid uncertainty. In China, for instance, market speculation has been banned as well as Bitcoin mining. Elsewhere, South Korean regulators have launched a crackdown on the distribution of stablecoins.
These hawkish approaches come as many major governments around the world acknowledge the potential of crypto and its wealth-creating properties. The economic boosts available for nations that strike the right balance to protect investors without damaging the development of the industry will be key in the months ahead.
Finding Regulatory Balance
In a year that may see a Bitcoin ETF, and will certainly see a Bitcoin halving event, it’s still global regulators that hold all the cards in unlocking the potential of cryptocurrency.
The decentralized nature of crypto and its availability to hold wallets on smartphones makes it easier for criminals to move money for nefarious means, and welcoming appropriate regulation can be important to maintain much-needed levels of investor confidence in digital currencies.
However, inhibitive restrictions and regulatory suspicion towards cryptocurrencies risk damaging the growth of an ecosystem with plenty to offer.
2024 may well shape up to be the biggest year in the brief history of cryptocurrencies. There’s no doubt that regulators will play a leading role in determining whether or not it will become a prosperous one for the industry’s biggest stakeholders.
The post Like it or Loathe it: Regulators Will Shape 2024 for Crypto, Not ETF Approval or Halving appeared first on Securities.io.
