The year 2023 can seemingly be looked at as important in terms of developments surrounding the cryptocurrency industry. With the G20 summit constituting discussions around a cryptocurrency-based regulatory framework, all the way to Bitcoin (BTC) contesting the $40,000 price, it’s believed that the industry’s tone is set for 2024. “In 2023, I believe developments unfolded, encompassing the crypto bill announcement, G20 presidency, discussions on crypto regulations, and the surge of BTC and Ethereum (ETH) beyond the $41,000 and $2,200 marks. Looking ahead, 2024 promises the event of the BTC Halving, along with innovations in the DeFi space and the approvals of spot ETF applications,” Rahul Pagidipati, CEO, ZebPay, a cryptocurrency exchange, told FE TransformX.
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Post 2022, expectations were understood to be low from the cryptocurrency industry, on account of how the situation panned out around Sam Bankman-Fried’s FTX. Media reports suggest that customers withdrew over the FTX fallout, resulting in the cryptocurrency industry’s valuation dropping below one trillion dollars. However, data provided by CoinGecko, a cryptocurrency data aggregator, showed that the cryptocurrency industry showed recovery signs in 2023 beginning, as it ended the first quarter with a $1.2 trillion worth of total cryptocurrency market capitalisation. The aggregator also mentioned that there was an upward trend in average daily trading volume, which rose 30% QoQ from -33% in Q4 of 2022 to a total value worth $77 billion in Q1 of 2023. The unveiling of the Crypto-Asset Regulatory Framework (CARF), by the Organisation for Economic Co-operation and Development (OECD), an intergovernmental organisation, is believed to be a pivotal milestone, as it has brought guidelines around crypto-assets taxation, based on operational capabilities and ongoing market trends. Moreover, changes were brought to the Common Reporting Standard (CRS), which refers to international guidelines for the automatic distribution of financial information amongst various countries’ tax corporations, to add derivatives such as crypto-assets and related platforms.
Apart from BTC, stablecoins also made their presence felt in the cryptocurrency market, as the top 15 stablecoins clocked a 4.5% drop in their market share, which amounted to $6.2 million, due to the USD Coin (USDC) depegging event and Paxos’ closure of Binance USD (BUSD). Reportedly, BUSD and USDC both encountered a drop in their values by 54.5% and 26.9% respectively, while Tether (USDT) recorded an increase in its value by recording a 20.5% increase, worth $13.6 billion, to its market capitalisation. Post the ETH 2.0 event, liquid staking governance tokens witnessed a 210.9% rise in market capitalisation in Q1 of 2023. In terms of institutional investments over BTC and ETH, participation has been done by companies such as Goldman Sachs, Morgan Stanley, BlackRock, BNY Mellon, among others. Within January 10, 2024, the US Securities and Exchange Commission (SEC) is expected to decide on the authorisation of spot BTC exchange-traded funds (ETFs) belonging to Fidelity, Invesco and BlackRock. Insights from a survey conducted by PricewaterhouseCoopers (PwC), a professional services company, showed that 83% of institutional investors expected cryptocurrencies to become valuable for the mainstream financial structure in the upcoming five years.
Despite the resignation of Changpeng Zhao (CZ) from his CEO position in Binance, over money-laundering charges, BTC crossed the $40,000 level and traded at roughly $42,000, with expectations laid on it to reach the $45,000 level. In 2024, the next BTC halving event is expected to occur, which means the mechanism to reduce the BTC mining reward by half to control the amount of new BTC coins. It’s believed that in April, 2024, the next BTC halving event will be happening after the total count of blocks reaches 740,000, which will reduce the block reward from 6.25 to 3.125, as per the IG Group, a foreign exchange company. Future predictions for 2024 indicate that more clarity will be provided on the much-awaited cryptocurrency regulations, along with tokenised payments making their way to banks. Data provided by Statista, a data and business intelligence platform, showed that in the cryptocurrency industry, the total count of users should reach 992.5 million users by 2028 with user penetration to reach 12.39% by 2028.
“I believe in blockchain and Web3.0 technologies as we move toward a decentralised future. I view blockchain as a force for good, not just a technology. The secret is believed to be a tokenised, decentralised node infrastructure that gives developers, businesses, and ecosystem operators more power. There seems to be a sense of optimism about blockchain’s potential to revolutionise as we look to India. This sentiment is considered to be reflected in the MENA markets,” Shrikant Bhalerao, founder and CEO, Seracle, a blockchain cloud for Web3.0 development, concluded.
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