Bitfinex has shared its positive outlook on the crypto market for 2024, expecting a 100% increase in the total market cap and a spot Bitcoin ETF approval. The exchange also analyzes the factors that could influence the price movements of Bitcoin and altcoins, such as sentiment, institutional demand, and miner activity.
Despite the challenges and uncertainties the crypto industry faced in 2023, such as regulatory crackdowns, legal disputes, and security breaches, Bitcoin and the broader crypto market performed remarkably well, registering impressive gains and reaching new highs. Bitcoin (BTC) registered a 160% rally this year in 2023, while the broader crypto market rallied by 100%, adding $800 billion to crypto investors’ wealth in 2023.
Bitfinex expects the crypto market rally to continue, while predicting another 100% gain next year in 2024. With the current total market capitalization of the crypto market standing at around $1.6 trillion, Bitfinex speculates that the total market cap could potentially reach $3.2 trillion, with asset values fluctuating within this range. The assessment considers various metrics and sentiment indicators, drawing parallels with similar points in previous market cycles.
Bitfinex’s analysis includes a forecast for an extended visit to the “extreme greed” sentiment area in the crypto fear and greed index during 2024. This heightened sentiment aligns with expectations of new highs for Bitcoin amid a bullish market cycle. The crypto fear and greed index is a tool that measures the emotions and sentiments of crypto investors and traders, ranging from 0 (extreme fear) to 100 (extreme greed).
Bitfinex delves into the institutional investment landscape and the spot Bitcoin ETF
In a recent statement, Bitfinex delves into the evolving landscape of institutional investment in crypto assets, emphasizing the potential impact of the eagerly anticipated spot Bitcoin ETF. The exchange anticipates a potential capital shift into higher-risk crypto assets as institutional investors seek diversified exposure in the coming year.
The approval of a spot Bitcoin ETF in the US has been a long-awaited and highly anticipated event in the crypto space, as it could signal a major milestone for the mainstream adoption and recognition of Bitcoin and other crypto assets. However, the SEC has been reluctant and cautious to approve any spot Bitcoin ETF applications so far, citing concerns over market manipulation, investor protection, and custody issues.
Bitfinex, however, is optimistic that the SEC will approve a spot Bitcoin ETF in 2024 after having constructive dialogue with the filers. The exchange also cites the success of the futures-based Bitcoin ETFs approved by the SEC in October 2023 as a positive sign for the spot Bitcoin ETF.
Despite this, Bitfinex predicts that institutional investment will predominantly favor Bitcoin, especially in the first half of 2024. The exchange employs the Market to Realized Value (MVRV) metric to gauge the short-term market dynamics. The MVRV metric can indicate whether an asset is overvalued or undervalued based on the behavior of its holders.
According to Bitfinex, current valuations draw parallels to historical periods such as June 2019 and July 2016, where sustained recoveries followed initial price dips. The analysis suggests an expected pullback post the $44,000-$45,000 zone, anticipating prices to either consolidate at these levels or experience a pullback rather than an immediate upward surge.
Bitfinex underscores the significance of monitoring Bitcoin miner activity in 2024
Bitfinex also underscores the significance of monitoring Bitcoin miner activity, particularly in 2024, a halving year. Bitcoin miners are rewarded with newly minted Bitcoin and transaction fees for their work.
However, the amount of Bitcoin miners receive per block is reduced by half every 210,000 blocks, or approximately every four years. This event is known as the halving, and it is designed to control the supply and inflation of Bitcoin. The next halving is expected to occur in May 2024, reducing the block reward from 6.25 Bitcoin to 3.125 Bitcoin.
The halving poses challenges for miners, as they face a reduced income and profitability. In this context, efficient and profitable operations become crucial for miners, as they have to balance their costs and revenues. Miners also have to compete with each other for the limited block rewards, which could lead to increased difficulty and hash rate.
The difficulty is a measure of how hard it is to find a valid block, and the hash rate is a measure of the network’s computing power.
Additionally, the exchange expects exchange inflows from miners to remain subdued for the majority of the year despite potential spikes in the next two months due to equipment upgrades. Exchange inflows are the amount of Bitcoin that miners send to exchanges, usually to sell them for fiat or other cryptocurrencies.
As Bitcoin prices climb, Bitfinex notes a limited incentive for miners to sell their holdings, as they may expect higher prices in the future.