Coin Bureau Crypto Predictions 2024!

The coming year is set to be a wild one for crypto. 2023 has been one of the most momentous and challenging periods in the history of this industry - and yet 2024 could well prove even more exciting. It’s time to buckle up and gaze into the crystal ball.

Today’s video is all about what we reckon could be in store for crypto in 2024. Coin Bureau’s finest minds have put our heads together to identify what we believe the coming year could bring for Bitcoin, Ethereum, stablecoins, altcoins and much more besides.

What will the halving mean for BTC? What might the next big crypto narrative be? Will we see new all-time highs in 2024? We give our answers to these questions and many others as we consider how 2024 could pan out.

So, join us for a look at what the future could hold for what is surely the craziest, most exciting and yes, perhaps most unpredictable industry on the planet. All we can really know for sure is that 2024 will be another rollercoaster year - and we’re excited to be along for the ride with you.

You can watch that video here.

📈 Crypto Market Forecast 📈

It looks like it’s going to be a good week for the crypto market. This is due to a combination of factors, most of which are seasonal in nature. For starters, we have the January effect, which, like the Santa rally between Christmas and New Year, is a seasonal phenomenon that has historically resulted in a market upswing.

The January effect happens because investors buy back all the assets they had sold for tax loss harvesting purposes in December. It's believed that the January effect is what kicked off last year’s big tech rally - tech stocks had the largest losses in 2022, so they were sold at the end of the year for tax optimization, and bought back in early 2023.

As some of you will know, US government bonds were some of the biggest losers in 2023. As such, it’s likely that investors who sold off their bonds in 2023 will buy them back, starting next week. This would have the practical effect of causing interest rates to decline, which would be a tailwind for risk assets like crypto (bullish).

This is likely to be particularly bullish for ETH, given that its price appears to be inversely correlated to interest rates. Put simply, a decline in interest rates in the US due to January effect bond buying could cause an ETH rally. This rally would likely continue until the Dencun upgrade testnet in mid-January (assuming it turns out to be a sell the news event).

Another seasonal factor that could be bullish for the crypto market relates to taxes in the US. In case you didn’t know, the IRS recently raised income tax brackets because of inflation. This will have the practical effect of many people being taxed less, and their additional income could find its way into the markets at the margin.

At the same time, the Fed’s overnight reverse repo facility still has around 800 billion dollars that the Treasury can draw liquidity from. This means that the US government can continue to fund its spending without having to draw liquidity out of the actual markets. It’s complicated, but the key takeaway is that it's another tailwind for assets.

As a cherry on top, US politicians will be away on holiday until the second week of January. This means that there are no risks of regulatory catalysts that could cause the crypto market to dip or crash, at least not in the US. Top of mind in this regard is Elizabeth Warren’s anti-crypto bill, which has reportedly been gaining momentum.

Given that the spot Bitcoin ETF approval is expected to occur early next week (specifically January 8th), it’s possible that the crypto market will see another large speculative rally towards the end of this week. If the Bitcoin ETF is approved as expected, then this rally will continue. If it’s delayed, it could be cut short, or the baton could instead pass to altcoins.

All we’re wondering is when the correction will come, if at all. Take a second to consider that crypto and stocks have basically been rallying for weeks on end. Eventually, the buyers will get exhausted. The only question is when and what the catalyst will be. Whatever the answer is, just remember that the markets can stay irrational longer than you can stay solvent.

🤔 The State of Bitcoin 🤔

For a while now, many within the Bitcoin community have been painfully aware of an ever-present danger looming over Bitcoin’s security model - one whose threat to break Bitcoin forever only strengthens as time passes.

If this is the first you’ve heard of such a thing, here’s the scoop – at Bitcoin’s inception, the primary incentive for miners to produce blocks and secure the network was the amount of BTC they received for doing so (aka inflationary rewards).

However, Bitcoin’s halving schedule has been cutting the rate of new BTC issuance by 50% every four years. At the same time, the popularity and price of BTC has also been increasing at an astronomical rate.

This means that while the value of the network being secured by these miners has been increasing, the BTC rewards that these miners have been receiving for securing the same network have been consistently dropping as time goes on.

In the long term, this could result in the value of the inflationary BTC rewards being far less in comparison to the actual value of the network the miners are securing. In other words, less incentive for miners to continue performing honest operations to secure the network.

This presents a fundamental security problem that could make miners more susceptible to being incentivised by malicious attack vectors, including nation states looking to seize control of the network.

So, how do we fix this?

Well, as Messari’s Ryan Selkis notes in his recent ‘2024 crypto theses’, there are three theoretical paths that the network can take to address the issue. The first is to subsidise the decreasing coinbase rewards with an increase in transaction fees earned by miners. The second is to remove the 21 million BTC supply hard cap and halving schedule in exchange for a fixed inflationary rate that makes it viable for miners to continue securing the network. The third is to switch BTC over to a proof-of-stake consensus so that the economic interests of its miners (or would-be validators) are aligned with the economic security of the network.

Paths two and three are less likely, as they go against the original vision enshrined in Bitcoin’s whitepaper. Who are we to tinker with what Satoshi and the other OG Bitcoiners brought into being? This places path one (increasing transaction fees) as the most likely fix for this problem.

In fact, this is a path that was foreseen by Satoshi himself. You’ll find evidence of this in the Bitcoin whitepaper, as well as in statements made by Satoshi on the Bitcointalk forum. Specifically, Satoshi stated that he believes the transaction fee will become the main compensation for miners in the long term. He estimated this to take 20 years from Bitcoin’s genesis and, given how we’re almost at year fifteen, I’d say that deadline is fast approaching.

This means that we need to find a way to drive more activity on top of Bitcoin, since more activity equals more transactions and thus more fees. We’ve already begun to see this happen - the average transaction cost on the Bitcoin network recently rose above $40 due to a surge in Ordinals activity.

Interestingly, the Ordinals surge also offered a glimpse into the problematic consequences of going with the ‘transaction fee route.’ As Digital Cash Network host Joel Valenzuela notes, going with the transaction fee route means that the Bitcoin layer 1 will eventually lose all traces of its identity as an independent, decentralised financial system, aka ‘freedom money.’

Let me explain.

As transaction costs rise, the average Joe will find it absurd to pay a $20 transaction fee to move $10 of BTC on chain. This means that most people will prefer holding their BTC with centralised service providers until they accumulate enough to make moving it worthwhile. If you’re wondering why the existing Bitcoin layer 2s are not enough, well, that’s a conversation we’ll have to have another day.

Anyway, at that point, Bitcoin will have completely shifted to the ‘digital gold’ narrative, prompting most to see it as a store of value.

This means that Bitcoin-based financial products offered by TradFi incumbents will eventually be the norm for investing in BTC. However, as former BitMEX CEO Arthur Hayes notes in his recent article, the rising popularity of these TradFi products, such as spot Bitcoin ETFs, will result in a future where these TradFi incumbents hold most of the Bitcoin in circulation.

However, this also means that most of this Bitcoin will rarely move on-chain. Not to mention the fractional reserve risk this presents. As Hayes notes, Bitcoin has value because “it moves,” a healthy number of transactions on the network. This is essential for keeping miners incentivised to continue validating transactions.

Ironically, these “high-fee” transactions are the reason the services offered by these centralised entities are seeing higher adoption.

It’s something of a “damned if you do, damned if you don’t” moment.

This means that the only way Bitcoin could move forward is to create financial incentives and scaling methods that incentivise higher transaction volumes, while keeping average transaction fees just low enough for most Bitcoin holders to practise self-custody.

Either Bitcoin will experience a Cambrian explosion as a programming layer, or it will fade away into the cosmos like a dying star. We’ll just have to wait and see.

💸  Bybit Deal  💸

Have you started thinking about new year’s resolutions yet? Well, if you're a crypto trader then one of them should be trying out a new exchange.

One of the most popular exchanges out there is Bybit. Not only can you access 100’s of crypto assets there, but we were able to secure a very special deal. This includes a bonus up to $40,000 and 0% maker fees for 30 days!

So, if you are gearing up for a bull market in 2024 then you might want to give Bybit a try and bag that deal whilst you can!

👉 Sign up to Bybit!

🔮 Video Pipeline 🔮

* Cardano Update: Does ADA still have potential?
* Top 10 Ways To Avoid Rug Pulls!
* Digital IDs: They Are Coming Your Way
* DeFi Regulation: Here’s What They Want To Do

🏆 What's New at This Week? 🏆

Coinsource Bitcoin ATMs: Everything You Need to Know!
Top 7 Solana Wallets 2024: A Home for your SOL Tokens
Changelly Review: Safe Exchange? Pros, Cons, and More!
Navigating the Future: The Emergence of Cross-Chain Swaps

📖 Quote of the Week 📖

And so 2023 draws to a close. It’s been a crazy twelve months in the crypto market, but it looks as if 2024 is shaping up to be our redemption year. So, let’s not take it for granted and let’s make every day count. Happy new year!

Tomorrow is the first blank page of a 365 page book. Write a good one” - Brad Paisley

Team Coin Bureau

Disclosure: Authors may own cryptoassets named in this newsletter. These are unqualified opinions, and a Coin Bureau newsletter, is meant for informational purposes only. It is not meant to serve as investment advice. Please consult with your investment, tax, or legal advisor. 

Guy Turner

Guy is one of the founding members and face of the Coin Bureau. Like many of us, he is just an average joe who became “crypto curious” back in 2013. After recognising the potential of blockchain technology, Guy set off on a mission to create crypto educational content, working with others to start the Coin Bureau website and released our first video on YouTube in 2019. You can learn more about him in his Who is Guy? blogpost.

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