Predictions For 2024 By Assets of Value

In 2022, the Federal Reserve’s bold move to implement unprecedented interest rate hikes to tame the soaring inflation triggered a significant stock sell-off and a downturn in the market. Meanwhile, the dawn of 2023 brought a landscape rife with challenges and complexities in Web3, blockchain, and AI. However, as we approach the end of 2023, a more positive narrative emerges. It is marked by Bitcoin’s price recovery, a plethora of exciting innovations, and a cascade of good news stories. Here are the best predictions by Assets of Value for 2024.

With inflation showing signs of easing, the Fed’s ability to ease off on intervention raises hopes for a “soft landing,”. This may slow the economy to curb inflation without plunging into a recession.

Against this backdrop, we present a compilation of predictions for 2024, exploring their implications for the future of Web3. Let’s dive in!

Prediction #1: BTC Will Hit New ATH

Forecasting prices are a key indicator for assessing the prevailing sentiment in the market. Diverse predictions abound regarding the future value of Bitcoin. Some enthusiasts boldly assert that it could surge beyond $500,000 during the current bullish trend.

Bitcoin commentator Plan B foresees an average price of at least $100,000 between 2024 and 2028. Meanwhile, BitQuant sets a target of around $250,000 following the 2024 halving. More daring predictions reach as high as $1 million. These are advocated by influential figures such as Cathy Wood and former BitMEX ex-CEO Arthur Hayes.

Source: VanEek

Counterbalancing this optimism is a more cautious outlook, suggesting that Bitcoin will likely breach the $80,000 mark in 2024. The potential approval of a Bitcoin ETF in the U.S. and the imminent Bitcoin halving contribute to this optimism.

The 4th Bitcoin Halving

Essentially, the upcoming halving in April 2024 will decrease the mining reward by 50%. It will slash the rewards from 6.25 BTC per block to 3.125 BTC. This adjustment is integral to maintaining Bitcoin’s restricted supply of 21 million tokens.

As the issuance of new coins undergoes a significant reduction, miners operating at a loss will likely disengage. They may relinquish their market share to those benefiting from low-cost power.

Fortunately, the impact on public markets appears minimal due to listed miners’ notably improved financial positions.

Source: Techopedia

Historical trends stress the bullish effects of past halving events on Bitcoin’s value. This applies to both in the lead-up to and aftermath of the event. Consequently, a prediction of $80,000 doesn’t appear outlandish.

However, investors must exercise caution amid this optimism and remain attuned to potential challenges. The growing presence of institutional players in the space may result in a diminished tolerance for the pronounced valuation swings. These swings have defined Bitcoin’s trajectory since 2016. Notably, Bitcoin is evolving from a favorite among retail and non-traditional investors to a mainstream asset.

Prediction #2: Consecutive Spot Bitcoin ETFs Launches

In 2024, a relatively low-risk outlook involves the probable approval of a spot Bitcoin ETF. There are various proposals currently under scrutiny by the Securities and Exchange Commission (SEC). Established entities, including Wisdom Tree, Invesco, Franklin Templeton, and Blackrock, have all submitted proposals.

According to Bloomberg Intelligence, there is a robust 90% probability of the SEC approving a filing by January 10. Additionally, the potential for witnessing successive launches of Bitcoin ETFs in January is plausible. Bloomberg estimates as many as ten new offerings.

Although spot Bitcoin ETFs are already available in other markets, such as Canada and Europe, it is crucial to acknowledge that the U.S. represents approximately 60% of the total global equity market value.

Moreover, numerous data analytics firms assert that the approval of a spot ETF could generate significant demand. This could potentially drive the price of Bitcoin between $50,000 and $73,000. However, some may perceive this estimate as overly cautious.

Insights From Gold ETF

Let’s analyze the path of gold, Bitcoin’s analogous counterpart. In the aftermath of the introduction of the first U.S.-based gold commodity ETF, SPDR Gold Shares (GLD), yields valuable insights.

Source: Bloomberg

Before the existence of GLD and its counterpart, iShares Gold Trust (IAU), investors had limitations. They had to choose between physical bullion, which entailed challenges of cost and storage, or the futures market, which was unsuitable for every investor.

Launched in November 2004, GLD played a pivotal role in enhancing overall gold demand by alleviating the frictional costs associated. Since its inception, the price of gold has surged by nearly 360%.

Anyhow, Bitwise anticipates the approval of spot Bitcoin ETFs, achieving the status of the most successful ETF launches in history. Their estimation suggests that spot Bitcoin ETFs could capture 1% of the $7.2 trillion U.S. ETF market within five years, translating to $72 billion in Assets Under Management (AUM).

Undoubtedly, this development will be a positive catalyst for the sector regardless of which institution secures approval first.

A New Era Dawns for Crypto

  • January 2024: The green light for a Bitcoin ETF, mirroring the success of the GLD, marks a transformative moment. It signals a monumental shift in regulatory sentiment toward cryptocurrency. Also, it provides mainstream investors with a regulated avenue to engage in Bitcoin investments.
  • February 2024: Post-approval, Bitcoin ETF trading kicks off, ushering in a fresh wave of institutional and retail investors. This development will bolster liquidity and stabilize the Bitcoin market.
  • March 2024: The potential for a prime rate cut in March 2024 marks a pivotal juncture. While typically aimed at stimulating the economy, this move also highlights caution, hinting at underlying economic challenges. Investors and analysts will closely scrutinize this period for its implications on the broader financial market and Bitcoin.
  • April 2024: Bitcoin experiences its scheduled halving event, reducing the reward for mining new blocks by half. This anticipated event may lead to substantial price increases as reduced supply pressures intersect with steady or growing demand.
  • May – November 2024: Many anticipate that this period will witness further rate cuts and increased liquidity, potentially fueling additional investments in Bitcoin. However, investors should be cautious, as these measures may be reactive to an impending economic slowdown.
  • December 2024: Michael Saylor, the founder of Microstrategy, previously stressed the significance of the FASB’s decision to adopt fair value accounting for Bitcoin starting after December 15, 2024. This move is a noteworthy endorsement of Bitcoin’s legitimacy as a global treasury reserve asset for corporations.

Prediction #3: Ethereum Won’t Flip Bitcoin In 2024

Ethereum will surge following the Bitcoin halving event, ignited by reduced Bitcoin miners’ rewards. This trend typically triggers a renewed upswing in Bitcoin prices, subsequently channeling profits into altcoins. Investment firm VanEck foresees Ethereum outpacing mega-cap tech stocks by a significant margin.

However, despite surpassing major stocks, Ethereum is not expected to overtake Bitcoin, dispelling the notion of a “flippening.” While there is a possibility of ETH gaining prominence in daily trade volume, the majority still expect Bitcoin to maintain its lead in market capitalization.

The ongoing battle between Bitcoin and Ethereum enthusiasts for the title of the largest coin by market cap has persisted for years. Bitcoin has consistently held the highest market capitalization by a substantial margin. However, Ethereum has steadily closed the gap since its inception in 2015, securing its position as the second-largest coin.

Ethereum undergoes continuous upgrades and witnesses increased utility on its network. This progress has led many to believe that Ethereum may eventually dethrone Bitcoin in marketcap.

“The Flippening” is the prospect of Ethereum surpassing Bitcoin. Crypto enthusiasts frequently use this term to describe Ethereum overtaking Bitcoin regarding market capitalization.

Regardless, in its 2024 financial outlook, JP Morgan, a global financial leader, predicts that Ethereum will outperform Bitcoin in the coming year. Ethereum’s upcoming EIP-4844 “Proto-dank sharding” upgrade is also a bullish case for ETH.

Prediction #4: Stablecoins Will Flip Visa

In 2024, the aggregate value of stablecoins on the blockchain will achieve a crucial milestone, at least surpassing $200 billion. The launch of Markets in Crypto Assets (MiCA) regulated stablecoins in Europe, the proliferation of yield-bearing stablecoins, and a resurgence in trading volumes will drive this surge.

Source: Defillma

Among the leading issuers of USD-pegged stablecoins, Circle (USDC) and Tether (USDT) collectively have a circulation of $115 billion, accentuating their dominance in the market. This robust product-market fit among token issuers will instigate numerous teams to replicate the success of these stablecoins in 2024.

Controversially, many expect USDC to surpass USDT, reflecting a shift in institutional adoption towards USDC, particularly evident on newer Layer 2 (L2) chains. Tether’s market share may decline further following enforcement actions by the US Department of Justice (DOJ) against Justin Sun and Tron for KYC infractions, terror financing, and market manipulation.

Source: Bitwise

Anyhow, Bitwise projects that stablecoins will surpass the settlement volume of Visa payments, considering the dollar and other asset-pegged tokens as one of crypto’s most impactful applications.

The optimism about the future of stablecoins extends beyond Bitwise. In a December 13 interview with CNBC, Circle CEO Jeremy Allaire predicted a surge in demand for stablecoins over the next few years as investors seek the security of internet-enabled digital dollars.

In the third quarter of 2023, Visa processed over $9 trillion in payments, while stablecoin trading volume exceeded $5 trillion.

The remarkable growth of stablecoins, evolving from near-zero market cap to an impressive $137 billion in the past four years, sets the stage for even higher trading volumes and utility in 2024. Asset manager Van Eck foresees the total stablecoin market cap reaching $200 billion by the end of 2024.

Prediction #5: Coinbase Surpassing Wall Street Expectations

Beyond crypto assets, Coinbase emerges as the leading contender in Traditional Finance, poised to capitalize on substantial gains anticipated in the 2024 bull market.

Throughout the year, Coinbase’s stock has exhibited exceptional performance, surpassing broader crypto markets with an impressive 300% gain. The company outperformed Wall Street forecasts in the three months ending September 30, contributing to an approximately 80% surge in shares since the financial update on November 2.

Legal developments in November, including guilty pleas from rival exchange Binance and its former CEO CZ on charges of money laundering and sanctions violations in the US, further fueled this rally.

To sustain its strong performance in 2024, Coinbase relies on a crucial factor: a definite upswing in crypto asset prices.

Growing Revenue

Source: Bitwise

Despite reporting a net loss, the company is steadily approaching breakeven. The potential realization of positive profits next year is another favorable trend for Coinbase.

Wall Street anticipates a 9% year-over-year revenue growth from $2.8 billion to $3.1 billion. However, given the recent developments, a projection of a 100% growth in revenue for the platform next year, exceeding Wall Street expectations by a factor of 10, is within reach.

Moreover, the approval of Bitcoin spot exchange-traded funds would be a significant victory for Coinbase, given its role as a custodian for various products, including those affiliated with BlackRock. This positioning could enhance Coinbase’s standing with regulators.

With 90% of its revenue generated from retail transactions and closely tied to crypto asset prices, Coinbase’s success hinges on the upward trajectory of these assets.

Historically, Coinbase’s trading volumes surge during bull markets, a trend expected to repeat itself. The platform has also introduced a diverse array of new products, from perpetual futures to U.S.-regulated futures contracts, a recently launched Layer 2 blockchain, Base, and on-chain identity solutions—all gaining traction, contributing to the optimistic outlook for the company in the coming year.

Prediction #5: Tokenization Gaining Massive Traction

Asset tokenization opens up innovative investment opportunities by enabling fractional ownership, incorporating programmable features, and improving traceability.

Source: KCC, OECD

The momentum witnessed in 2023, characterized by headlines of multinational financial institutions introducing tokenization products, signals a growing institutional interest in web3. Many foresee this trend continuing into 2024, with institutional money managers feeling the urgency to explore tokenization, driven by a desire to keep pace with early adopters.

While many acknowledge tokenization as one of crypto’s revolutionary applications, fully operational projects remain limited.

However, initiatives led by financial giants such as Apollo Global Management and JPMorgan, as part of the Monetary Authority of Singapore’s Project Guardian, have raised expectations for increased tokenization activities in 2024.

Simultaneously, there is a concerted effort among Wall Street firms to intensify their efforts in tokenizing assets on the blockchain. State Street Global Advisors has shown interest in tokenizing ETFs, and BlackRock CEO Larry Fink has expressed the operational potential of underlying technologies in the digital assets space.

Source: Coinbase

In 2023, numerous new participants on public permissionless networks began offering access to tokenized US Treasury exposure directly on-chain. The total assets held in US Treasury-like exposure on-chain have surged sixfold to over US$786 million as digitally native users seek exposure to yields unrelated to traditional crypto yield sources.

The Regulatory Front

Despite the increasing interest, obstacles to widespread adoption persist, with regulatory uncertainty identified as a primary perceived obstacle.

Keep an eye on regulatory developments in tokenization, particularly in Singapore, the EU, and the UK.

However, analysts at Citigroup project that by 2030, there could be as much as $5 trillion in tokenized private-sector securities and funds. It encompasses corporate debt, financing collateral, and alternative assets such as real estate, private equity, and venture capital.

Concurrently, analysts at the consulting firm Roland Berger anticipate that asset tokenization will evolve into a market worth at least $10 trillion by 2030. It signifies a 40-fold increase in the value of tokenized assets from 2022 to 2030.

Source: LedgerInsights

In 2024, tokenization will likely expand to encompass other market instruments, including equities, private market funds, insurance, and carbon credits. The client demand for higher-yielding products and the necessity for diversified sources of return will drive this shift.

There is widespread anticipation that even financial giant JPMorgan will engage in tokenization by launching a fund on-chain as Wall Street gears up to tokenize real-world assets in 2024.

Prediction #6: A Breakout In Web3 Gaming

Web3 gaming experienced a revival of interest in the second half of 2023 following a significant decline in transaction activity during the early stages of the recent crypto winter. Currently, this sector focuses primarily on capturing the attention of mainstream gamers who are not part of many “crypto-first” communities.

The gaming industry constitutes a total addressable market of approximately US$250 billion, projected to grow to $390 billion over the next five years.

Despite massive investment opportunities, existing web3 “play-to-earn” models, exemplified by early projects like Axie Infinity, have been widely rejected by users. Such models may have heightened skepticism among mainstream gamers regarding web3 integrations, prompting developers to experiment with merging the network effects of high-quality AAA games with sustainable financialization mechanics.

Source: VanEek

In 2024, the blockchain gaming space will witness at least one title surpassing one million+ daily active users, showcasing its long-awaited potential. IMX is seen as a strong contender to become a top 25 coin by market cap in 2024 with the upcoming release of games like Illuvium and Guild of Guardians.

Major Chains To Benefit

Meanwhile, DappRadar’s recent report indicates that the WAX blockchain currently leads the gaming sector with 406,000 daily unique active wallets, with Alien Worlds being a notable game. However, concerns exist about the authenticity of some players, as bots may be farming tokens due to the simplicity of the games. In contrast, Immutable has multiple AAA games on its platform that implement token models resistant to simple farming and are genuinely enjoyable to play. These well-funded titles, developed over the years, are set to be released in 2024. They could attract player numbers comparable to traditional AAA games like Starfield, which reached 10 million players within its first two weeks earlier this year.

Immutable has also addressed technical challenges that hindered the success of Web3 gaming, including wallet management. The introduction of Immutable’s “Passport” enables users to log in to games and manage their blockchain-based game items through a familiar single sign-on process while abstracting away blockchain interaction. The increased simplicity offered by Immutable, combined with significant distribution partners such as the Epic Games Store and GameStop, may finally pave the way for a blockchain-based game to become a mainstream hit.

As numerous projects reach the 2-3 year mark in their game development process, following substantial fundraising in 2021-2022, the potential release of web3 games in 2024 may provide valuable insights and data for a more accurate assessment of this sector.

Prediction #7: Foundations For Crypto Regulation Will Continue To Be Built

The quest for regulatory clarity remains a persistent theme in crypto, and 2024 will be no exception. Many crypto proponents believe that well-defined regulations could benefit the industry, including providing crypto exchanges with a more certain operating environment and attracting investors who might otherwise be apprehensive. The industry’s unanimous desire for clarity is apparent as it strives to progress.

While progress on spot bitcoin ETPs represents a positive step, numerous aspects of the crypto landscape still require attention.

One key aspect is the classification of cryptocurrencies as securities, a matter that investors are closely monitoring due to potential implications for future regulations.

Moreover, uncertainty within the US crypto landscape fosters an environment of missed opportunities and a market constrained by enforcement-centric measures. Despite the specific language used in guidance and public statements in 2023, the market perceives US banking supervisors’ attitude toward the digital asset ecosystem as at least unfavorable, if not outright hostile.

Consequently, all but the largest and most reputable crypto companies may face difficulty establishing banking relationships. Furthermore, the regulatory gates erected through non-objection letters and other permission-seeking requirements in the US have inadvertently dampened banks’ incentive to invest in digital asset technology or engage actively with clients involved in such activities.

On a positive note, there is a growing awareness among US legislators of the increasing risk of global regulatory arbitrage. In 2023, several US House Committees advanced acts such as the Clarity for Payment Stablecoins Act and the Financial Innovation and Technology for the 21st Century Act (FIT 21 Act).

While the regulatory outlook in the US remains uncertain, other global regions are making strides in implementing various measures.

In 2023, the European Union introduced licensing requirements for exchanges and wallet providers, and the UK government has expressed its intention to enact formal legislation in 2024, subjecting certain crypto activities to the same oversight as banks and financial services firms.

The foundation for crypto regulation will continue evolving in 2024, leading to incremental regulatory clarity and increased institutional participation.

Investor Caution and Risk Awareness

Given the prevailing lack of regulatory certainty, investing in crypto with an affordable amount is advisable. Additionally, it’s crucial to acknowledge that Bitcoin and other cryptos are highly volatile and may be more susceptible to market manipulation than securities.

Furthermore, crypto holders do not enjoy the same regulatory protections as those applicable to registered securities, and the regulatory landscape for crypto remains uncertain. Notably, the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation does not insure crypto.

The Economic Outlook for 2024

If 2023 saw the looming threat of rising interest rates that failed to trigger an anticipated recession and potentially derail the ongoing stock market rally, investors are now looking to 2024 with hopes for stabilization and normalization.

Recent months have significantly increased the chances that the U.S. may avoid an economic recession in 2024. However, the probability remains nonzero, accentuated by the deeply inverted U.S. Treasury yield curve.

Moreover, the robust 5.2% GDP growth experienced in Q3 2023 is unlikely to persist. Fueled by debt-driven consumer spending, it may represent the final surge from households relying on previous government stimulus.

Forecasts point to a slowdown, with an anticipated 1.3% GDP growth in 2024 attributed to the Federal Reserve’s rate hikes and geopolitical uncertainties. Despite this, economists foresee a “soft-ish” landing, with a gradual decline in inflation prompting the Fed to consider rate adjustments later in the year.

The potential for a recession hinges on endogenous factors such as the likelihood of renewed weakness in the U.S. banking system or the overall pace of disinflation.

Some argue that inflation has already peaked, and moderating aggregate demand should support a stronger disinflationary trend cyclically. It has largely materialized, aided by structural forces like AI, contributing to greater automation and lower input costs.

However, shifting demographics, such as the departure of baby boomers from the workforce, may act as a counterbalance.

Furthermore, an economic slowdown and a moderation in price pressures could lead the Federal Reserve to consider rate cuts by mid-2024, if not sooner. Lower capital costs might support risk assets in Q2 2024, although challenges may arise in Q1 2024 depending on the entrenched position of the Fed.

Source: Coinbase

In such a scenario, cryptocurrencies may not be entirely immune. However, the economic outlook also suggests a weaker USD trend in the coming year, presenting an opportunity for cryptocurrencies, given their tendency to be priced in USD.

While correlations between changes in many macro variables and BTC (and ETH) returns have decreased over the last year, a favorable macro backdrop remains a crucial aspect of the market outlook for 2024.

Conclusion

While the certainty of the upcoming year remains elusive, investors can anticipate the continuation of many trends that gained momentum towards the end of 2023, barring any unforeseen Black Swan events.

  • Economists expect the cooling of inflation to persist, influencing bond yields and interest-rate-sensitive products such as mortgages.
  • As yields stabilize, albeit at levels higher than in the past decade, investors may find alternatives to equities, which could face pressure due to rich valuations.
  • Crucially, the timing and extent of interest rate cuts by the Federal Reserve will play a significant role. The assumption that the Fed will adopt a more dovish stance early next year drove the outperformance of equity and crypto markets in 2023. Therefore, 2024 may bring a sobering reality check for investors or a gentle landing, allowing recent trends to continue.
  • As market participants brace for potential interest rate declines in the US, UK, and Europe, the scales tilt in favor of riskier assets such as Bitcoin. This optimism reflects a more positive market outlook, with investors displaying increased comfort in embracing risks.
  • Additionally, the looming prospect of US regulatory approval for spot Bitcoin ETFs places financial giants like BlackRock in the spotlight. Such approval could trigger a renewed surge in demand for Bitcoin, countering short-term profit-taking with the steadfast commitment of long-term holders.
  • Furthermore, experts foresee the convergence of regulatory advancements and a diminishing Bitcoin supply propelling the cryptocurrency to all-time highs by mid-2024 or possibly even sooner.

After a bustling year for the crypto space in 2023, 2024 appears poised for even more action. Investors should stay vigilant and prepared for the unfolding developments.

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