The last 12 months have been another rollercoaster in the world of crypto. Few, if any, could have predicted how 2023 would turn out, but – at least from a market perspective – it has been a much more positive period than the previous year.

In the year to date, Bitcoin is up by around 150% whereas, during 2022, it fell by nearly two-thirds – a chastening experience for the many people who joined the crypto ride during the Covid-19 pandemic. And that’s before you even get to the biggest events of 2022: the collapses of Celsius and FTX.

Still, as an industry, crypto can only benefit from these painful but necessary events. Arguably, that is one of the reasons things appear to have turned a corner in 2023.

What might 2024 have in store? As ever, it’s almost impossible to say – but you can say it will more than likely be as unpredictable as the last few years. There are, nonetheless, some events we can speculate on.

The ‘Halvening’
As we all know, the Bitcoin ‘halvening’ – when the rewards provided to miners is cut in half – will happen in April. Despite the fact that it shouldn’t really make any difference, and has been known about for years, it might increase the price. Past performance is, of course, no guide to future returns, but history indicates the value of Bitcoin tends to rise ahead of the big event, as investors respond to greater scarcity.

Central Bank Digital Currencies
With a few already in circulation, I expect more central authorities will start to roll out CBDCs – central bank digital currencies. In particular, they will start to put the shackles on the ones they want, ensuring they can pull the requisite levers as and when they need to.

I’ve argued elsewhere these could be a very positive development for the likes of monetary stimulus. But, they are centralised cryptos, not decentralised like most of the ones we are all familiar with. For purists, that may be reason enough not to use them.

Regulation
We are already beginning to see regulators flex their muscles in the crypto world, but expect to see more regulations implemented worldwide over the next 12 months.

In my view, this is a positive development from crypto, strengthening the general public’s trust in some – rightly, not all – tokens. There will inevitably still be scams in any realm of finance, but proper regulation should help challenge many people’s lingering perceptions about it being ‘the Wild West’.

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FTX’s Aftermath
The collapse of FTX has cast a long shadow – and it is all still being worked through. The supervisors of the exchange’s liquidation have been given permission to sell a basket of cryptos, and to distribute the proceeds to creditors.

It is still not clear who these particular cryptos belong to – and it may never be clear – but, unfortunately, I suspect the total payout will be below 25% when all is said and done.

Exchange-traded Funds
There is great excitement all round about the prospect of Bitcoin, or other crypto-related, ETFs. In theory, there will be a ruling between 5th and 10th January on whether they will be allowed by the US Securities and Exchange Commission (SEC).

I’m not yet convinced they will be given the go ahead. If ETFs don’t get the rubber stamp of approval, I would anticipate the market reacting badly.

Adoption
Adoption of crypto is still charging ahead and I expect that to continue during 2024. The problem is there are still very few cases where crypto outclasses fiat. XRP, being a bank-to-bank transfer token, may well do better than others. But that depends on the final outcome of the court cases with which it is involved.

And, as I always say, the regulator can change the rules anytime to suit itself.

Disclaimer:
The information provided in this article is for informational purposes only and should not be considered as financial or investment advice. Cryptocurrency investments are subject to market risks, and past performance is not indicative of future results.

Readers are encouraged to conduct their own research and consult with financial advisors before making any investment decisions. The author and the publication do not assume any responsibility for financial losses or damages resulting from the use of the information provided herein.

Cryptocurrency markets are highly volatile, and prices can fluctuate significantly. Always be aware of the potential risks associated with trading or investing in cryptocurrencies and be prepared to bear the consequences.

Additionally, regulations and legal frameworks related to cryptocurrencies vary by jurisdiction. Readers should be aware of and comply with local laws and regulations concerning cryptocurrencies and related activities.