Trading Signals 05/02 – 09/02
Fresh Look at Major Cryptocurrencies: Forecast for 2024
In the cryptocurrency industry, there are many exciting topics, but one particularly attractive question for market participants is the most effective ways to invest in the coming year. Let’s analyze in detail and make predictions regarding specific cryptocurrencies and tokens.
What to Expect in 2024?
First and foremost, it is worth noting that, according to analytics forecasts, the bear market and the period of moderate growth are already behind us. They expect that 2024 will herald the beginning of a new bull market. In the first half of the year, the market may exhibit mixed trends, but in the second half, a new wave of cryptocurrency boom is likely to commence, potentially surpassing even the surge of 2020-2021.
Considering this optimistic view of the coming year, as well as the close correlation between most cryptocurrencies, it can be assumed that most coins and tokens will show growth in the next year. Investments in cryptocurrencies, therefore, may turn out to be more profitable than investments in traditional financial instruments. However, let’s examine this situation in more detail.
Since October 16th, BTC has seen a remarkable increase of over +37%, dragging a significant portion of the market with it. This surge in enthusiasm is most likely due to the frequent indications we receive about the impending approval of Bitcoin ETFs.
While the upcoming bull cycle will have its distinctive characteristics, one aspect will remain consistent: Bitcoin will serve as the primary driver of growth for the entire market. Both supply and demand factors are anticipated to contribute to the positive performance of assets.
Specifically, the halving event scheduled for April will reduce the mining reward per block from 6.25 BTC to 3.125 BTC. Given that miners are obligated to sell some of their coins periodically to cover operational expenses, the inflow of coins from miners is expected to significantly decrease. Moreover, the current average cost of mining one BTC stands at $33,300 (approximately equal to its market price). After the halving, this cost will double to $66,600. While the price of Bitcoin may not immediately double following this event, historical data suggests that miners should begin turning a profit within a year.
From the perspective of demand factors, the outlook appears even more promising. Many traders and investors believe that the Federal Reserve (Fed) will inevitably reduce interest rates in the coming year. By the end of 2024, these rates are expected to be around 4.5-4.75%, which would provide ample access to affordable credit for various investments, including Bitcoin. Should a global economic downturn occur in 2024, interest rate cuts could happen even sooner.
Rumors are actively circulating regarding the imminent approval of SEC applications for spot Bitcoin ETFs. While Gary Gensler and official representatives of the regulator have not definitively confirmed such predictions, considering the timelines for reviewing current applications, it is highly likely that at least some of them will receive approval between January and March 2024. In such a scenario, market players will gain access to Bitcoin-based financial instruments, and related funds and trusts will increase their holdings of BTC.
Furthermore, it is entirely plausible that, as the bull market strengthens, certain corporations may follow the example of MicroStrategy and prioritize the accumulation of Bitcoin strategically. If this happens, institutional demand for the asset will reach new heights. Additionally, it is not out of the question that Bitcoin could become recognized as legal tender in jurisdictions beyond El Salvador. While it may be premature to discuss granting official currency status to Bitcoin by G20 nations, smaller countries in Latin America, Africa, or Asia may choose to take this step.
In summary, based on the above analysis, it is reasonable to expect that in 2024, Bitcoin will likely approach or even surpass the previous cycle’s peak of $69,000.
In recent years, Ethereum has undeniably been the leader among altcoins. The most popular NFT collections, DApps, meme coins, and various other projects are hosted on the Ethereum platform. The Ethereum ecosystem is continually evolving, and the development team has successfully implemented several updates, including the Merge last year. However, when comparing the price dynamics of Ethereum and Bitcoin over the past 5-7 years, it becomes apparent that ETH still lags behind Bitcoin in the long run.
This shouldn’t come as a surprise because Bitcoin plays the role of the primary store of value (“digital gold”) in the cryptocurrency market.
It’s also important to emphasize that investments in altcoins always come with higher risks compared to Bitcoin. Altcoins typically have less decentralization, less secure blockchains, and greater vulnerability to regulatory decisions, among other factors. However, wise investing involves taking additional risks only when there is an expectation of higher returns.
Therefore, based on the relationship between expected returns and risks, many analysts do not recommend investing in the top 10 altcoins for 2024.
However, most cryptocurrency holders typically allocate a portion of their funds to Bitcoin and another portion to Ethereum, and then make additional choices based on their preferences, such as Ripple, Solana, Cardano, and so on. But is such diversification sensible?
It’s important to remember that diversification is a safeguard against ignorance. It doesn’t make sense if you know what you’re doing.
How to Approach Strategies?
So, let’s break down how to look at these strategies.
The conservative approach is all about playing the long game, where you invest in BTC and basically just HODL it. It’s like the classic HODL strategy, you know what we mean? It’s a smart move to use a cold wallet to keep your stash super secure. With this strategy, you’re minimizing the risks, and the returns on your investment (at least, over a few years) should still be pretty darn good.
Now, if you’re feeling gutsy and want to take some risks, that’s where the aggressive strategy comes in. Here, you’re consciously diving into the deep end, but you’re counting on higher returns to make up for it. But as we mentioned earlier, the big-name altcoins aren’t the best fit for this plan since they’ve pretty much run their course in terms of outpacing Bitcoin’s growth.
To wrap it up, the crypto scene in 2024 should be a wild ride for investors. Your returns, though, might be all over the place depending on your investment mix. If you’re feeling adventurous, keep an eye out for new and promising projects (after doing some solid research, mate – don’t just trust what crypto influencers are saying on social media). On the flip side, if you’re more of a cautious investor, you can stick to the tried-and-true method of HODLing Bitcoin – that strategy should still bring in some serious profit.
But remember, we’re not dishing out financial advice here. Whatever moves you make and coins you buy, it’s all on you, and there are always risks involved.