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Cryptocurrencies: Extended Gains in 2023 and a Glimpse into the Future of 2024

06 February 2024 13:52, UTC

Since the creation of Bitcoin in 2009, the world of cryptocurrencies has been marked by volatility, innovation, and rapid advancements. There were over 26,000 cryptocurrency projects started in 2016 alone, making up a market worth a total of $917 billion.

The nature of cryptocurrencies means they experience more dramatic \ups and downs than more tangible commodities. This has shown no signs of changing in 2023. As the year draws to a close, we’re taking a look at how cryptocurrencies have performed in 2023, and exploring what the future holds in 2024.

Cryptocurrency Review for 2023

2023 has been a positive year for crypto, with the major currencies experiencing upturns not seen since the 2021 boom. While the price of Bitcoin is still significantly lower than the $64,556 it reached that year, it has skyrocketed in 2023. Starting the year at a low $16,638, the value of Bitcoin currently stands at $42,864, an increase of over 150%.

Ethereum, the second biggest player on the crypto market, has also seen substantial gains. It started the year with a value of $1,201, and currently stands at $2,179, an increase of 82%.

Factors Contributing to Extended Gains

Several factors contributed to the extended gains observed in the cryptocurrency market. Some important ones are an increase in global acceptance, more established regulations, and technological improvements, among various other factors.

More and More Accepted

An increasing number of companies are now accepting cryptocurrencies as payment. Part of the 2021 boom was down to PayPal accepting crypto the previous year, and the list of companies has grown considerably since then. You can now pay Spotify, Airbnb, Playstation, Burger King, and many more with cryptocurrencies.

Online casinos have joined in too, and you can now play games like Jackpot 6000 on various platforms, and pay with cryptocurrencies. This increased use of cryptocurrencies is understandably going down well with investors, who can feel more confident about its long-term security.

Regulatory Developments

Regulatory developments play a pivotal role in creating a more favourable environment for digital assets. When governments establish clear regulations, it provides a sense of legitimacy and security for investors.

The Markets in Crypto-Assets Regulation (MiCA) is one example of this type of regulation, and creates uniform EU market rules for crypto-assets. Some countries have been more proactive than others when it comes to regulation. As it increases globally though, those left behind are more likely to change their stance.

Institutional involvement, a key driver of the crypto market’s success, has continued to grow. Major corporations and financial institutions are not only acknowledging the value of cryptocurrencies, but actively integrating them into their portfolios. This has propelled cryptocurrencies into mainstream financial conversations.

New Technology

Technological advancements have been another driving force behind the market’s upward trajectory. Innovations in blockchain technology, particularly the rise of Layer 2 solutions, have addressed scalability issues, making cryptocurrencies more accessible and efficient. The integration of decentralised finance (DeFi)) has added layers of functionality and creativity to the blockchain space.

Non-fungible tokens (NFTs) have also emerged as a significant trend, revolutionising the concept of digital ownership. The art and entertainment industries, in particular, have witnessed a surge in NFT adoption. This has provided creators with new monetisation avenues.

Looking Ahead to 2024

Predicting the future is, of course impossible, but it’s worth looking at patterns to see how things are likely to develop next year.

The Whales Seem Happy

Taking a look at the major players in the crypto market, we can see an increase in the number of entities holding over 1,000 BTC. This is a positive sign for the future. Much of this could be down to the things we’ve already mentioned. Uniform regulation and institutional involvement are only likely to increase, and coming more into the mainstream should be good for the long-term health of cryptocurrencies.

Technology to Keep Moving

Technological innovations will continue to shape the future of cryptocurrencies. Further development in scalability and privacy features can address current limitations. Fewer limitations means more opportunities for use.

While technology is always moving, next year could be a particularly exciting time on that front. Both AI and the IoT (Internet of things) are expected to affect blockchain technology. In 2024 we could see a revolution in the advancement of crypto technology.

Things to Get Even Better?

Some experts believe things will get even better in 2024, and we will see the next halving in April 2024. Traditionally, the biggest crypto gains occur shortly after a halving, when Bitcoin creation is halved, to preserve value. This involves a new bull run, and is sometimes referred to as a “Crypto Summer”.

Basing their estimations on various factors, including time since the last peak, and difference between peaks and troughs, experts believe 2024 could be an even better year for cryptocurrencies than 2023.

A Note of Caution

Amidst the optimism surrounding the extended gains of 2023, it is crucial to acknowledge the challenges and risks that remain. Market volatility is still an issue, with the value of cryptocurrencies subject to rapid fluctuations. If predicting bull runs were simple, everyone would be making a fortune, but the market can always throw up unwanted surprises.

Security remains a critical issue in the crypto space. While blockchain technology itself is secure, there are still vulnerabilities in exchanges, wallets, and smart contracts. Dealing with security concerns is paramount to maintaining investor trust and confidence.

Scalability is another challenge. Efforts to improve it are vital if cryptocurrencies are to continue growing.

Bring on 2024

Risk management strategies are essential for investors to navigate this dynamic landscape successfully. The journey has many challenges, but the potential rewards are undeniably exciting. As is the impact of cryptocurrencies on the global financial landscape. The evolution of the crypto market is a dynamic narrative that continues to unfold, only time will tell what 2024 will bring.