This year looks bright for cryptocurrencies.

If a couple of years ago, people thought digital currencies were financial curiosities, only useful for purchasing a limited range of services and products online; nowadays they describe them as one of the most profitable financial instruments. Crypto experts believe the sector will go through major development in 2024, especially as it’s the year of halving for Bitcoin, hence its supply becomes scarcer. The industry has already been witnessing a more aggressive bid on adding cryptocurrencies to investment portfolios, and a growing number of people have become interested in how to buy Bitcoin with bank transfer before its price spikes. 

The institutional support the crypto sector got recently has been one of the most significant factors that led to a bull run at the start of 2024. 

However, other big changes are about to come in the crypto sector, as digital currencies are highly volatile assets. Many investors stated that Wall Street performed phenomenally in 2023, but the crypto one fared even better. At the end of the year, most cryptocurrencies registered a value increase of at least 115%. Even if there are thousands of projects to pick from, Bitcoin and Ethereum, as the two largest assets by market cap, have done the heavy lifting in the sector. At the start of the bear market, they accounted for around 58% of the total market cap. At the end of the bear phase, they held 67% of the market’s total value. 

This being said, let’s look at what predictions we have for 2024. 

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Rumors will make people buy cryptocurrencies

If you’re wondering why Bitcoin’s price surged in 2023, the answer is that several factors had led to it. Cryptocurrencies have been surrounded by positive sentiment in 2023, and Bitcoin has been one of the main rumors’ subjects over the months. Since the industry has started buzzing about Bitcoin’s exchange-traded fund and its possible approval by the Securities and Exchange Commission, its price has started increasing steadily. Once the event took place in January 2024, the largest cryptocurrency by market cap registered a growth in popularity. Now, everyone is expecting the halving event, scheduled to take place in April 2024, which will also have a major positive impact on Bitcoin’s value. 

The ETF and halving are two catalysts that influence Bitcoin’s price and, therefore, the values of all the other cryptocurrencies, as they follow the same trend as Bitcoin. Financial institutions have tried extensively to get approval for a Bitcoin ETF, and regulators have denied it several times, stating that the crypto environment could be manipulated. However, after the recent approval, the ETF has increased access to digital assets through more diversified channels without having to purchase coins on a crypto exchange. 

Bitcoin’s halving event will also significantly change its ecosystem because it reduces the block reward miners receive by 50%. All halving events during Bitcoin’s history have caused market surges in its price as the supply became scarcer and the demand higher. The news and rumors circulating in the crypto sector have always influenced investors’ decisions, especially when they surround important events such as the mentioned ones. 

Dog-named cryptocurrencies might experience a drop in popularity

Crypto experts agree that popular dog-named digital currencies like dogecoin and Shiba Inu will underperform in the following months, even if the market is heading towards a bull run. Last year, their prices and the values of all the other cryptocurrencies increased. However, they didn’t even reach the number of classical blockchain-based projects by far. 

The main issue with Dogecoin and Shiba Inu is they have a limited utility case; they can only be used as payment tokens. The industry is saturated with digital currencies that could be used for the same purpose: to pay for services and goods. The dog-named cryptocurrencies have nothing special to attract investors. 

Research also shows that these meme coins lack real-world utility because a few companies integrate them among their payment methods. 2,500 companies use Doge and 900 SHIB coins. 

The increased volatility also associated with meme coins could prove daunting in 2024 because more institutional investors have started to shy away from them. 

The crypto sector doesn’t function entirely separate from the Wall Street

For several years crypto investors took pride in the fact that the digital assets in their portfolios have become game changers. The growing use of smart contracts – the innovative technology brought by Ethereum – and digital payment adoption offered countless benefits to investors. They felt like they were no longer tethered to the global or national economy and could make a profit without engaging with the stock market. 

Unfortunately, cryptocurrencies are to some degree connected to the global economy, and therefore, they cannot totally decouple from the stock market. Hence the performance of the stock market will impact to a certain extent how the performance of the crypto market. 

While the crypto sector functions differently than Wall Street, it cannot stop its influence. Therefore, it depends on Wall Street’s well-being, and investors must keep an eye on its tendencies before risking their funds. 

For investors, access to capital is crucial, and as the interest rates for the majority of asset classes have spiked over the last few years, getting financial stimulus has become more challenging. The bad news is that access to capital could remain strenuous. 

2024 isn’t safe for failures

Only because 29024 is a bullish year for cryptocurrencies doesn’t mean the sector is safe from failures. During the bear market, we witnessed the epic collapse of the FTX and several cryptocurrencies being wiped out of the market. The sector still lacks adequate oversight, so there is still a place for some level of manipulation. A negative prediction for 2024 is that Tether, the largest stablecoin by market cap, could de-peg from the US dollar and drop in value. 

Before buying any cryptocurrency, research the industry and fully grasp what it implies.