After a brutal crypto winter in 2022, the resurgence that swept through the crypto asset class in 2023 was more than refreshing. With signs that a bull market might be looming ahead, 2024 is shaping up to be a year for the history books.
While they might seem outlandish, here are three predictions for the upcoming year. Remember, this is crypto -- stranger things have happened.
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It's still Bitcoin's year
Let's cut to the chase: Bitcoin (BTC +3.15%) might have a better 2024 than it did in 2023. With the first prediction for the new year, Bitcoin should hit a new all-time high.
Last year, Bitcoin's rise could be attributed to the anticipated approval of the spot Bitcoin exchange-traded fund (ETF) and fresh interest in novel use cases like Ordinals, a Bitcoin-based equivalent of non-fungible tokens (NFTs).
While these two catalysts helped renew sentiment across the crypto market, they will likely prove to be minor accelerants compared to what 2024 has in store. The most influential development pushing Bitcoin toward an all-time high is the upcoming halving. Hardwired into Bitcoin's code, the halving reduces Bitcoin's inflation rate in half roughly every four years. Currently sitting at 1.75%, in April of this year it will fall to 0.85%.
CRYPTO: BTC
Key Data Points
Historically, halvings have been significant drivers of price appreciation as demand must adjust to a diminished inflation rate. In years that a halving occurred, Bitcoin has grown by more than 128% on average. A jump of this magnitude would put Bitcoin's price at $99,000 -- a new all-time high.
To take it a step further, this halving will be unlike any other. For most of Bitcoin's history, the rate of freshly mined supply more or less kept up with demand. But that shifted recently. Currently, only 2.3 million coins are available on exchanges for purchase, a level not seen since 2017. As a result, the upcoming halving will be the first time in history that there are fewer available coins than at the previous halving. With an unprecedented supply shock inbound, don't be surprised if Bitcoin hits six figures in 2023.
The Bitcoin renaissance continues
Categorized as a Layer 2 blockchain since it operates in tandem with a Layer 1 blockchain, Stacks (STX +2.98%) unlocks Bitcoin to take on new use cases and realize its true potential as the foundation of a decentralized economy.
As previously mentioned, the popularity of Ordinals sparked interest in building Bitcoin-based solutions, allowing it to take on use cases beyond just a store of value. As general interest transformed into a movement, Stacks became a natural beneficiary with its Bitcoin compatibility and rose more than 200% in 2023. Yet this is just scratching the surface of what may come in 2024.
CRYPTO: STX
Key Data Points
Scheduled to go live in April, the Nakamoto Release will unveil novel functionality that allows Bitcoin holders to swap their Bitcoin for a new asset, sBTC, and then use that token across the DeFi economy. Once finishing their DeFi activities, holders can seamlessly redeem their sBTC for the original BTC. Since sBTC's price is pegged to BTC, there is no slippage, and best of all, the exchange process is done in a decentralized and secure fashion through the use of smart contracts, preserving Bitcoin's distinct characteristics.
For the second prediction of 2024, expect Stacks to double in value and become a top 20 most valuable cryptocurrency. With the Bitcoin renaissance gaining steam, Stacks is in an ideal position to continue growing and claim the spotlight.
Ethereum is overdue for a run
While Bitcoin and many other cryptocurrencies rode waves of momentum in 2023, Ethereum (ETH +9.53%) more or less watched from the sidelines. It still jumped an admirable 80% but paled in comparison to other notable altcoins like Solana, which made gains of more than 900%, and Avalanche, which jumped 250%.
CRYPTO: ETH
Key Data Points
But this might change in 2024 as Ethereum is scheduled to get another critical upgrade. Known as EIP-4844 and expected to be released in the second half of the year, the upgrade will reduce transaction costs and boost throughput to 100,000 transactions per second, effectively solving two of the main challenges hampering Ethereum's maturation. Building off of The Merge from 2022, a previous upgrade that switched the blockchain from proof of work to proof of stake, EIP-4844 is just one out of a series of upgrades that aims to "grow Ethereum until it's powerful enough to help all of humanity."
Despite its lackluster performance in 2023, Ethereum remains the premier blockchain for novel use cases of cryptocurrencies such as decentralized finance, NFTs, yield farming, and more. When considering the added benefit EIP-4844 will bring to the ecosystem, my third prediction for 2024 is that it should be the year that Ethereum reminds the crypto world that it is the undisputed home of decentralized finance and makes a run of historic magnitude.
