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Is A Cryptocurrency Bull Market On The Horizon For 2024

Last Updated January 2, 2024 1:12 PM
Andrew Kamsky
Last Updated January 2, 2024 1:12 PM

Key Takeaways

  • Periods when cryptocurrency prices rise occur when investor confidence and market optimism are rising.
  • The Bitcoin halving in April 2024 is a catalyst that is likely to spark a bull market as the Bitcoin supply reward reduces by half, increasing its scarcity.
  • A Bitcoin ETF will likely enhance market accessibility, potentially boosting Bitcoin’s demand and value.
  • Fed policies, primarily interest rate cuts, could positively influence the cryptocurrency market 2024.

The year 2022 witnessed a 76% decline in the total cryptocurrency market, marking a memorable bear market in the crypto industry. Widespread pessimism surrounded the sector throughout the year, in contrast to 2023, a year marked by resilience and recovery of the crypto market. Bitcoin rebounded from a low of $16k to $43k, recording a 167% increase in its price valuation. Ethereum doubled in value from $1.2K to $2.3K in a similar move.

By the end of 2023, the total market capitalization of the cryptocurrency industry grew from $760 billion to $1.6 trillion. With the current sentiment in the market being one of optimism and belief, as the crypto industry moves into the new year, a bull market is anticipated, taking crypto to new all-time highs in 2024.

What Is A Crypto Bull Market?

A crypto bull market is characterized by rising investor confidence and increasing cryptocurrency prices, often reflecting broader optimism in the crypto market. 

The demand for cryptocurrencies like Bitcoin, Ethereum, and various altcoins increases during such times. The demand for these coins increases as positive news, technological advancements, and favorable regulatory developments fuel demand.

Catalysts For A 2024 Crypto Bull Market

The year 2024 marks the fifteenth year of Bitcoin’s existence, and like any teenager going about life, this cryptocurrency is beginning to make its mark on the world as it continues to mature. Here are some bullish events that should increase demand for Bitcoin and Cryptocurrency:

1.0 Exchange Traded Fund (ETF) Approval And Institutional Investment

The expected early 2024 approval of U.S. spot Bitcoin ETFs (exchange-traded funds) by significant firms such as BlackRock, Fidelity, VanEck, and others will likely lead to substantial inflows as the Q1 2024 deadline approval draws near.

The approval of these Bitcoin ETFs will likely enhance the Bitcoin narrative as a ‘hard money’ option by increasing public awareness of debt-driven money printing. The introduction of spot Bitcoin ETFs will make Bitcoin more accessible to institutional investors, as they will not need to self-custody it, facilitating more significant investment in the cryptocurrency industry.

Pending ETF Approvals
Pending ETF Approvals

2.0 Bitcoin Fourth Halving In April 2024

Scheduled for April 2024, the fourth Bitcoin halving will reduce the new Bitcoin supply entering circulation from 6.25 to 3.125 Bitcoin every ten minutes. Historically, such a supply cut, mainly if demand stays constant or rises, has increased Bitcoin’s price. This is primarily due to the scarcity effect, as the reduced availability of Bitcoin makes each Bitcoin more valuable.

Additionally, the halving event typically gets significant media attention and public awareness, attracting new investors and further boosting demand. In the past, this combination of decreased supply and heightened interest has set the stage for a substantial bull run in the months following the halving.

3.0 Bitcoin Primed For A First Time Real ‘Supply Shock’ Post Halving

The supply of Bitcoin on exchanges has reached its lowest point in five years, with just 1.9 million Bitcoin available for trading as of December 2023, the smallest amount since March 2018. 

Bitcoin Balance On Exchanges
Bitcoin Balance On Exchanges

This reduction in readily accessible Bitcoin, along with data from LookIntoBitcoin’s 5+ HODL Wave  chart, indicates that 32% of Bitcoin holders haven’t moved coins in the last five years, which leads analysts to predict a supply shock in 2024. On top of the following information, Bitcoin will likely see an increase in demand due to the ETF approval and a further supply shock post-halving.

5 Year Hodl Wave: LookIntoBitcoin
5 Year Hodl Wave: LookIntoBitcoin

4.0 93% Of Bitcoin Is Already In Circulation

Approximately 93% of Bitcoin’s total supply has already been mined and is currently in circulation, leaving only about 6-7% to be mined over 120 years. 

This minimal amount remaining to be mined underscores Bitcoin’s scarcity principle, a critical aspect of its value proposition, sharply contrasting with the unlimited printing potential of traditional fiat currencies. 

As the years progress and the creation of new Bitcoin into the market slows, the scarcity principle will likely play a significant role in potentially increasing Bitcoin’s value, particularly as demand escalates in a market with a limited supply.

5.0 The FED Chairman Jerome Powell Cutting Interest Rates In 2024

Analysts expect the U.S. Federal Reserve to reduce interest rates as early as March 2024, particularly if inflation continues its downward trend more quickly than expected. Fed Chair Jerome Powell hinted at a potential shift in monetary policy. The reduction in interest rates is in response to the cooling of inflation rates, which aligns with the Fed’s 2% target. 

Such a move to cut rates a month before the anticipated Bitcoin halving would significantly influence the price of Bitcoin and other cryptocurrencies. It will drive cryptocurrencies upward as the market reacts to easier monetary conditions.

6.0 Global Political Bodies Embracing Bitcoin

Several presidential candidates worldwide are increasingly integrating Bitcoin into political platforms. In the U.S., Republican Vivek Ramaswamy is developing a detailed crypto policy framework and accepting Bitcoin donations for his campaign, reflecting his popularity within the party.

In Argentina, President Javier Milei, a proponent of libertarianism and the Austrian economy, publicly views Bitcoin as a strategic tool for potentially dismantling the Central Bank of Argentina. Javier’s perspective aligns with the Argentine finance minister’s recent announcement of a decree legalizing the use of specific currencies, including Bitcoin, for certain contracts and payments.

Political figures like Canada’s Pierre Poilievre, America’s Robert F. Kennedy, and Panama’s Gabriel Silva also include Bitcoin and cryptocurrency in policy initiatives. A notable example is President Nayib Bukele of El Salvador, who actively made Bitcoin legal tender in 2021, showcasing the increasing political interest in political bodies embracing cryptocurrency. 

This trend will likely continue into 2024, fueling Bitcoin adoption into mainstream acceptance.

7.0 FASB Guidelines And Accounting Treatments Effective From 2025

Coinbase is set to become the first publicly traded company to separately report layer 2 blockchain revenues, with its Base Protocol expected to exceed $100M in annualized revenues, significantly contributing to its business. This move may be influenced by adopting new FASB guidelines, which permit companies to record mark-to-market gains on cryptocurrencies, thereby enhancing a Bitcoin appeal as a corporate treasury asset. 

With new accounting changes effective from 2025 but available for earlier adoption, a significant financial entity outside the crypto sector, like a bank or exchange, might announce the launch of a semi-public blockchain, similar to a layer 2 network, that could potentially connect to public blockchains through authorized participants.

8.0 Altcoins And Ethereum Protocol Enhancement

Ethereum’s upcoming EIP-4844 update is set to significantly improve the Ethereum protocol, reducing transaction fees and enhancing scalability for layer 2 networks like Polygon, Arbitrum, and Optimism. Ethereum’s upgrade will likely lead to a consolidation in the Ethereum L2 sector, with a few key players emerging dominant. 

The result will be increased trading opportunities and higher transaction volumes on decentralized exchanges, boosting Ethereum’s market presence and setting it up for broader success in the anticipated bull market by the end of 2024. 

Historically, during bull markets where Ethereum outperforms Bitcoin, this pattern has also emerged with other altcoins that will see significant growth in asset valuation. 

9.0 Protocol Enhancements In Smart Contracts And NFTs

NFT activity is expected to surge, reaching new monthly volumes as speculators re-enter the crypto market. The focus will be on prominent NFT collections on Ethereum, enhanced crypto gaming experiences, and innovative Bitcoin-based offerings. 

Although Ethereum has historically dominated NFT sales with a significant lead over Bitcoin, the introduction of Bitcoin’s Ordinals protocol and the development of layer 2 chains on the Bitcoin network are set to continue to innovate the crypto ecosystem, likely bringing in new participants and capital.

10.0 Decentralized Exchanges Market Share Set To Increase In 2024

The market share of decentralized exchanges (DEX) in spot crypto trading is expected to increase to new all-time highs, propelled by high-throughput chains such as Solana that enhance the on-chain trading experience. 

Simultaneously, significant advancements in wallet technology, particularly with the integration of “account abstraction” for facilitating automated payments, are expected to drive more users toward on-chain platforms and self-custody options.

11.0 Technical Analysis Indicates Strong Momentum For A Bull Market

Between 2009 and 2021, Bitcoin and the cryptocurrency industry saw three all-time highs. On average, it has taken roughly 1470 days between each high to progress from one peak to the next. 

Analyzing historical chart patterns depicted in the Bitcoin chart below, if Bitcoin continues to follow the cyclical nature it has been on since 2009, a top might emerge around August-October 2025.

Technical analysis suggests that for Bitcoin to achieve its next high, 2024 needs to be a strong year. At some point in 2024, Bitcoin is expected to at least revisit its previous all-time high of $69K. 

After surpassing this threshold, it would likely spend around six months to one year in price discovery mode, indicating that Bitcoin could see a notable price increase throughout 2024 and into 2025.

Bitcoin Four Year Cycle
Bitcoin Four Year Cycle

From the technical chart presented above, a notable observation is the consistency of the cycles, with the time between peaks being relatively stable. 

Another key takeaway is the progressive increase in peak values, indicating a long-term upward trend despite inherent volatility in the asset.

Conclusion

As 2024 approaches, the cryptocurrency market is primed for a potential bull market driven by pivotal events in 2024. The primary catalysts include:

  • The anticipated supply shock from Bitcoin’s fourth halving in April 2024.
  • The potential early 2024 approval of the spot Bitcoin ETF.
  • The Federal Reserve plans to maintain ample liquidity while potentially reducing interest rates.

Changes in FASB accounting standards are expected to encourage companies to include Bitcoin on company balance sheets as a treasury asset. 

These developments will likely significantly alter market dynamics, setting the stage for a robust bull market in the crypto sector. Therefore, 2024 stands as a defining year for cryptocurrencies, with these events poised to profoundly impact the market’s direction.

FAQs

What is a crypto bull market?

A crypto bull market occurs when increasing investor confidence and positive developments push cryptocurrency prices upward, reflecting a general market optimism.

Can the 2024 Bitcoin halving trigger a bull market?

The 2024 Bitcoin halving will reduce the new supply of Bitcoin in circulation, which will likely spur a bull market if demand remains steady or increases due to its scarcity effect.

Will the approval of a spot Bitcoin ETF affect the crypto market?

Approval of a spot Bitcoin ETF could boost crypto demand by making Bitcoin more accessible to institutional investors and raising public awareness.

What impact will Federal Reserve policies have on crypto in 2024?

The Federal Reserve’s potential interest rate cuts and liquidity maintenance in 2024 could create favorable conditions for a cryptocurrency bull market.

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