Crypto in 2024: The Rise of Bitcoin and Ethereum

CoinDesk Indices Head of Research, Todd Groth, Believes in Positive Outlook for Altcoins in Light of Bitcoin and Ethereum's Growth and Favorable Macro Environment This Year

Bitcoin and Ethereum to take altcoins higher by 2024

Last week, the approval of spot bitcoin exchange-traded funds (ETFs) sent shockwaves through the financial industry. It was an event that we had been eagerly waiting for, and it did not disappoint. On the debut day alone, over $4.5 billion was traded, making it quite a spectacle. But why did it take so long for us to get here? Well, some things are just worth the wait.

The Crypto Market Grows Up

In 2024, the crypto market is finally coming into its own and rubbing shoulders with traditional asset classes. Despite the economic uncertainty of the past year, Bitcoin and Ethereum have proven themselves to be favorites, offering desirable alternatives to traditional stocks and bonds. Asset allocators have taken note of their impressive performance in 2023, leading to an increasing demand for these digital assets.

Spot Bitcoin ETFs: A Game-Changer

The launch of spot Bitcoin ETFs may have sparked the “buy the rumor, sell the news” debate, but in the medium to long term, it will undoubtedly be a turning point in crypto adoption rates. Why is that? Well, these ETFs provide a more familiar and regulated way for investors to enter the crypto market. Just look at Coinbase and MicroStrategy stocks in 2023 – they outperformed Bitcoin for a reason. The introduction of ETFs will open doors for Registered Investment Advisors (RIAs), pension funds, and hedge funds to participate. Investment banks will also jump on the bandwagon and create new products based on these ETFs. In fact, the CBOE is eagerly awaiting approval to start listing options for these ETFs. Brace yourself for an exciting ride!

Inflows and Big Numbers

Get ready for a tsunami of cash pouring into the crypto scene. RIAs manage around $130 trillion, and even a 1-2% portfolio allocation to digital assets through ETFs could inject 1 to 2.5 trillion into the market. That’s roughly equivalent to the current market capitalization of the entire digital asset market. However, there’s a catch – most of this cash will flow into Bitcoin and Ethereum. Sorry, altcoins, you’ll have to wait your turn for now. But don’t worry, as Bitcoin and Ethereum rise, it will have a positive impact on other digital assets. Crypto-native investors will take profits from the majors and allocate capital into smaller tokens. This will empower crypto-native players to dominate the market.

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Macro Factors at Play

Now, let’s consider recession and interest rates. If the U.S. economy takes a nosedive in late 2024 due to higher interest rates, we can expect a dovish period in the interest rate cycle. And who will benefit? You guessed it – digital assets. Bitcoin’s digital scarcity and Ethereum’s increasingly deflationary tokenomics will shine in a world of growing deficits, government spending, and abundant fiat liquidity. However, keep your expectations in check. There will be volatile moments of low liquidity and deleveraging within digital assets. It’s all part of the game.

Smart Portfolio Construction

In 2024, forget about trying to predict where the market is heading. Instead, focus on smart portfolio construction and position sizing. Utilize price momentum indicators like the Blocking.net Bitcoin and Ether Trend Indicators (BTI and ETI) to moderate net exposure and manage overall market risk. If you’re itching for altcoin exposure, consider a diversified approach. The recently launched Blocking.net 20 (CD20) index offers diversified altcoin exposure while capping major tokens like Bitcoin and Ethereum. This allows you to better manage market volatility and diversify potential risks.

Preparing for Altcoin Season

It’s time to tilt your portfolio towards altcoins while holding firmly onto Bitcoin and Ethereum. Altcoins shine when the crypto market is booming, and their growth potential is undeniable. But keep in mind that markets never move in a straight line, and there’s always a twist in the tale. So, exercise caution and maintain a balanced approach.

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Q&A

Q: What are the benefits of investing in spot Bitcoin ETFs?

A: Spot Bitcoin ETFs provide a regulated and familiar entry point for investors, making it easier to allocate capital into the crypto market. They open doors for various institutional investors like RIAs, pension funds, and hedge funds, allowing them to directly participate in the crypto market’s potential.

Q: How will the introduction of spot Bitcoin ETFs impact the market?

A: The launch of spot Bitcoin ETFs is expected to significantly increase crypto adoption rates. This will lead to a surge in demand for Bitcoin and Ethereum, driving their prices higher. Additionally, investment banks will create new derivative products based on these ETFs, further fueling market growth.

Future Outlook and Investment Strategies

Based on current trends and market dynamics, the future looks promising for Bitcoin and Ethereum. With the approval of spot Bitcoin ETFs, these digital assets will attract more institutional investors, driving up demand. Additionally, macroeconomic factors like recession and interest rates could further boost the appeal of digital assets as a hedge against economic downturns. However, investors should be prepared for market volatility and carefully construct their portfolios to manage risks and capitalize on potential opportunities.

As always, it’s important to stay informed and make decisions based on your financial goals and risk tolerance. Keep an eye on market trends, leverage price indicators, and consider a diversified approach to navigate the evolving crypto landscape.

References

1. Crypto Reputational Issues – Year 2024 May Bring about Changes
2. Coinbase – Buy and Sell Bitcoin
3. MicroStrategy – Business Intelligence and Mobility Software
4. Blocking.net 20 (CD20) Index
5. Blocking.net – Crypto Market Insights and Analysis

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What are your thoughts on the rise of Bitcoin and Ethereum in 2024? Are you considering altcoin investments? Share your opinions and join the discussion on social media using the hashtags #Crypto2024 and #BitcoinEthereumRise.

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