2024 Cryptocurrency Market Review and Future Outlook

1.In the first half of 2024, the cryptocurrency market experienced significant volatility, ranging from the peak of a bull market to a correction phase. Bitcoin reached an all-time high in March, but the halving event failed to sustain market momentum, leading to a correction after May. The market was influenced by multiple factors, including global macroeconomic uncertainty, geopolitical conflicts, and sell-offs by miners and government institutions, which exacerbated volatility. Despite this, Bitcoin still recorded a 39% annual increase, far exceeding the S&P 500 index.

2.Key market indicators have retreated from their highs earlier this year, but since July, exchange trading volumes and stablecoin supply have begun to recover, indicating a resurgence in market liquidity and activity. However, the sluggish spot ETF trading volume and weak primary market fundraising reflect institutional caution towards the market. Nevertheless, the emergence of market hotspots such as Meme tokens, politically related events, and DeFi have, to some extent, supported total value locked (TVL).

3.The cryptocurrency industry is playing an increasingly important role on the global political stage. On the one hand, during the U.S. election, cryptocurrencies became a focus for both parties, with their influence on policy and the market growing. Market volatility risks increased significantly before the election, with Trump’s election being highly favorable for the crypto market, while Harris's election would bring relatively weaker positive effects. On the other hand, Bitcoin has become an important tool for cross-border value transfer amid geopolitical conflicts and Western sanctions. The correlation between cryptocurrency prices and geopolitical situations, especially for Bitcoin and Ethereum, has become increasingly evident, strengthening its linkage with assets like gold.

4.In the first half of 2024, the global economy slowly recovered, gradually emerging from the pandemic slump. Economic recovery was uneven, with strong U.S. performance and weaker growth in Europe, while emerging markets faced challenges such as high-interest rates and geopolitical tensions. Global inflation fell slowly, but service price stickiness remained strong. The U.S. economy showed robust growth, and the strengthening dollar, along with the Federal Reserve’s rate cut expectations, became key market concerns. The extent of rate cuts will impact the performance of risk assets like Bitcoin. Despite challenges, the recovery of global trade and consumer confidence provided support for economic growth.

5.The biggest driving factors for the market’s rise in the first half were the approval of Bitcoin and Ethereum spot ETFs and the Bitcoin halving event. The former increased cryptocurrency’s recognition in traditional financial markets, attracting institutional funds; while the latter, although slower in response, is expected to drive significant BTC appreciation in the mid-to-long term. The correction after March was mainly driven by the Mt. Gox compensation and the German government’s sell-off, both of which contributed to selling pressure and the spread of market panic.

6.This cycle differs from previous ones in the following aspects: the deeper involvement of institutional investors may alter traditional market patterns to some extent; BTC continues to solidify its dominant position as a core asset, while ETH’s market share has gradually declined in the face of competition from emerging chains and its inability to capture sufficient value. The Meme sector led the rise ahead of BTC, while the concept of an Altcoin Season has faded and weakened in intensity.

7.Looking ahead to the second half of the year, U.S. dollar liquidity and the election will remain key drivers of future market trends. In the short term, uncertainties surrounding interest rate policy and the election will persist, and the market is likely to favor a news-driven trading model. The probability of continued volatility in September and October is high. In the mid-to-long term, after November, as easing policies are gradually implemented and the election results become clear, institutional capital inflows and new narratives will drive the second phase of the bull market, with an estimated peak between $100,000 and $120,000.

This article is from Foresightnews:

https://foresightnews.pro/article/detail/68713

Best regards, AIC Team September 30, 2024