Strategic outlook for crypto in 2024: regulation, ETFs, and the halving

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2023 brought mixed signals for the crypto industry, yet the overall trend stayed surprisingly positive

The cryptocurrency sector faced a challenging year, but the numbers still pointed upward. The total market capitalization of digital currencies rose by more than 138%, adding over 870 billion dollars in value compared with the previous year. Bitcoin led with a gain of 152.53%, while other major tokens also posted strong results. Ether and Binance Coin gained 91.95% and 25.69% respectively, and many smaller currencies climbed well over 150% in 2023. The strongest growth came from a handful of assets that surged far beyond the rest, underscoring a broader recovery after a difficult period. The year also highlighted the sector’s movement toward broader institutional involvement as regulations began to take shape around the world. The European MiCA framework, seen as a first of its kind, is expected to foster greater trust among banks and traditional financial players. In short, 2023 concluded with a sense of rebound and growing mainstream attention.

Industry executives and observers describe 2024 as a year of consolidation. Regulatory clarity is a key driver of this outlook. Javier García de la Torre, who oversees Binance operations for Spain and Portugal, notes that the coming year will hinge on how rules evolve and how technology advances, along with overall market confidence. A stable regulatory regime helps erase lingering fears tied to past events in the sector, including high-profile failures and investor losses. The European Union’s MiCA regulation is seen as a major step forward, laying groundwork that supports the transfer of crypto assets and electronic money tokens with more robust legal protections. Blockchain Intelligence founder Almudena de la Mata points to MiCA as creating a safer environment, while traditional banks begin exploring custody and trading services for crypto clients, helping to normalize usage.

The question on many lips is how banks will handle the future of digital assets. Ángel Luis Quesada, chief executive of Onyze, suggests that it may soon be possible to open crypto accounts within banks, allowing customers to deposit assets and move trust from the crypto exchange to a traditional institution. This regulatory momentum has sparked a ripple effect: if regulators show support, banks are likely to follow, opening room for a new line of business centered on cryptocurrency accounts. Leif Ferreira, co-founder and chief executive of Bit2Me, argues that MiCA could become a launchpad for banks to offer bitcoin services to a broad customer base, potentially accelerating retail adoption.

The rise of ETFs

As a clear regulatory framework takes shape, institutional acceptance grows. The crypto sector has seen renewed energy from the prospect of Bitcoin-focused exchange-traded funds. About a dozen applications for spot-price Bitcoin ETFs have emerged, with major asset managers such as BlackRock, Fidelity, WisdomTree, and Invesco among the applicants. BlackRock has acknowledged strong demand for bitcoin products from clients, signaling a robust appetite for regulated exposure to the asset. A spot Bitcoin ETF would let investors gain bitcoin exposure through funds, avoiding the need to directly manage the currency or handle its storage and security concerns, according to EurocoinPay’s Herminio Fernández. Such products appeal to institutions for their cost efficiency and regulatory clarity, and they may also attract retail investors who have stayed away from direct blockchain involvement.

The U.S. Securities and Exchange Commission has deadlines to decide on these ETF proposals, with some decisions expected in early 2024. Several filings, including partnerships between Ark Invest and 21Shares, are close to finalization. If the first ETF receives approval, others with similar features may follow swiftly, given the shared characteristics across proposals. Industry observers expect a favorable tilt in the regulatory environment, aided by ongoing conversations between the SEC and major managers like BlackRock, Grayscale, Fidelity, and Invesco. Reuters reports indicate regulators have asked for final changes before year-end, underscoring the momentum behind these products.

In parallel, the SEC has signaled a tougher stance on certain crypto platforms, pursuing enforcement actions against prominent exchanges. This has spurred market participants to emphasize transparency, safety, and regulatory compliance as core pillars. A leading voice from EAE Business School echoes this view, noting that clear communications and credible safety measures are essential to rebuild and sustain trust in the sector.

The halving mechanism and price dynamics

One topic that keeps the market buzzing is Bitcoin’s halving, a built-in feature of the network that reduces new supply roughly every four years. The process halves the block reward and tightens supply, a dynamic historically linked to price rallies. The distribution cap remains fixed at 21 million coins, with a gradual decrease in new supply paired with steady demand. Industry analysts explain that the halving is a fundamental driver of token economics, helping to explain why bitcoin’s price might rise when the supply growth slows. As a result, many investors expect a fresh bullish cycle as the event approaches.

Forecasts point to a scheduled reward reduction from 6.25 to 3.125 bitcoins per block, which would also lower Bitcoin’s annual inflation rate. Market observers suggest that this supply-side shift tends to boost interest in bitcoin and can lift the broader market. The consensus among several experts is that the halving adds to the potential for price appreciation while reinforcing the case for bitcoin as a store of value within a diversified investment strategy.

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