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The year 2023 was a somewhat confusing year for the cryptocurrency market as it faced many challenges, ranging from the tightening of regulatory restrictions by regulators to the exit of some platforms from important markets. On the other hand, the momentum surrounding cryptocurrency funds has been an impetus for the market to reach relative highs.
Some political unrest and geopolitical factors around the world also fueled the rise in Bitcoin price in particular, which saw record highs of over 100 percent (but not yet peaked), which analysts attributed to technical and economic effects in addition to the impact of recent geopolitical tensions resulted in its price exceeding $40,000.
Bitcoin price reached its highest level ever at around $69,000 in November 2021 and since then the currency has lost around 60 percent of its value.
Regarding what awaits the cryptocurrency market in the new world in 2024, amid uncertainty about the future of the interest rate in the United States of America and increasing uncertainty in the market, in addition to talks about intensifying the regulatory process, expressed in separate statements Experts told the Sky News website in Arabic about the factors that will determine future market trends and the expected impact of a tightening of the regulatory process on market developments.
Global situations
Equity Group senior financial markets analyst Ahmed Azzam said in exclusive statements to the Eqtisad Sky News Arabia website that digital currencies have benefited greatly from global economic conditions in 2023, especially in the second half of the year. This creates the possibility of further increases in 2024 for the following reasons:
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- High risk appetite and demand for risk instruments such as digital currencies due to news of interest rate cuts in major economies at the start of 2024.
- News has been circulating that the Securities Supervisory Commission (SEC) of the American Stock Exchange is accepting the idea of Bitcoin ETFs and ETFs.
- The expectation that the Securities and Exchange Commission will approve a group of index funds in 2024 has prompted many large investment companies and funds, such as the American company “BlackRock”, to submit major applications for digital currencies, most notably Bitcoin, which Harbinger is a price rise after the price reached… Bitcoin reached almost $45,000.
- Due to the official reliance on ETFs, the digital currency market is expected to be more impacted as around eight funds have filed to set up an exchange-traded fund.
- Lowering interest rates. The lower the interest rates, the stronger the trend towards risk instruments, led by digital currencies. Currently, the market value of digital currencies is about $1.8 trillion, and in 2024 we could see a stronger increase that could reach more than $2 trillion market value.
- The mining reward halving will halve the supply of Bitcoin, resulting in positive price momentum for Bitcoin trading in 2024.
- Bitcoin’s rise to around $45,000 and the existence of alternative currencies at low levels could represent a positive opportunity for low-cost digital currencies to record gains in the coming period as Bitcoin is known to be the leader of the herd for digital currencies, and the Record gains could lead to alternative currencies posting record gains. Next period.
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Factors Affecting Cryptocurrency Performance
VI Markets CEO Ahmed Moati, in his interview with the “Eqtisad Sky News Arabia” website, identified a number of main factors that influenced the performance of cryptocurrencies in 2023 and caused their decline, the most important of which are:
- Many fraud operations have been carried out through cryptocurrencies, which has resulted in their reputation being tarnished.
- More than one hacker attack has occurred on cryptocurrency platforms
- Some platforms filed for bankruptcy, the most notable of which was the largest platform, FTX, which was declared bankrupt.
- Cryptocurrency platforms are shutting down in some major countries due to tightened restrictions and moving to other, less powerful markets.
- In some countries, rules and laws began to be further tightened, perhaps the most prominent of which is the United States of America, which stood in contrast to the year 2022.
He points out that there was great optimism among traders in the crypto market after some countries legalized the situation and officially approved Bitcoin, and it was expected that other countries would follow suit, but what happened in 2023 with a tightening of the Rules happened, the opposite was the case and laws and the expected upswings did not occur as expected. The value of Bitcoin rose to one hundred thousand dollars during the year, but when it rose, it only reached $43,000.
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El Salvador became the first country in the world to legalize digital currency trading in 2021. This was followed in 2022 by the Central African Republic, which became the first country on the African continent to introduce Bitcoin as an official currency.
Moati said crises are known to have a major impact on cryptocurrencies as their value increases and individuals turn to them, which is referred to as “digital gold,” similar to the yellow metal “gold” sought as a safe haven in China During times of crisis, the value of Bitcoin has increased, but has not reached the highest value it had previously reached.
Moati said that the geopolitical tensions and crises that the world is currently experiencing and that are impacting the global economy have made cryptocurrencies a safe haven for some to escape these events and he expects cryptocurrencies when they do continue, will see a larger increase.
Regarding the future trends of cryptocurrencies in 2024, Moati explained that this year will be full of challenges in this area, but it will continue to rise but will not be as strong as the booms in 2020.
What about the year 2024?
He added that the rise or fall of cryptocurrencies in the new year is related to two main factors:
- Monetary Policy: If the US Federal Reserve cuts interest rates, it will have a positive impact on cryptocurrencies as inventories increase. When interest rates are lowered, money will leave banks and flow to other destinations, including cryptocurrencies. However, if monetary policy continues to tighten, cryptocurrencies could decline.
- Rules and Laws: If more restrictions and stricter laws are enacted, cryptocurrencies will decline, especially in the United States of America, while on the contrary, if there is relief, currencies will rise. The rules will play a key role in 2024 by tightening or relaxing the laws.
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