Bitcoin price continues to stay below $44,000, and altcoins have once again turned red. Profitable investors are selling. On-chain metrics have reached levels that previously triggered declines, and historical data has pulled the markets down somewhat due to high profitability. However, it is important for BTC to find support at higher levels while these intermediate corrections occur.
Cryptocurrencies in 2024
Yesterday and today, total spot Bitcoin ETFs reached $7.6 billion. On the ETF launch day, we saw over $600 million in net inflows. But only 13 days have passed since the start of 2024, and investors have many events to witness throughout the year. BlackRock, the world’s largest asset manager, has shared three predictions that could support the cryptocurrency markets in 2024.
As 2024 begins, BlackRock expects continued larger macro variability and high market volatility. This environment, characterized by a positive stock-bond correlation and core inflation remaining above target, could lead to significant movements in cryptocurrencies.
Three Predictions for the Crypto Markets
The Federal Reserve is expected to start cutting interest rates this year and make reductions above 150 basis points by the end of 2024. However, the Fed’s current expectation is a 75 basis point cut if conditions are met, indicating that the market’s overly optimistic stance continues. So, what developments do BlackRock experts expect in 2024 that could affect cryptocurrencies?
- Persistence of Inflation: Despite the desire to believe that the “inflation monster” has been tamed, service inflation may continue to be stubborn in 2024. This scenario could affect investor sentiment towards assets like cryptocurrencies, which are often seen as a hedge against inflation.
- Fiscal concerns and the unsustainability of the US’s twin budget deficits raise questions about the attractiveness of cryptocurrencies as alternative assets, given the potential for downward pressure on the US dollar.
- Europe’s Market Potential: Europe’s optimistic outlook on earnings growth and consumer spending could indirectly affect the crypto market, especially in terms of global investment flows and risk preferences.
BlackRock CEO Fink has stated in the last 24 hours that he believes in cryptocurrency as an asset class and that interest in the RWA space will multiply. He also implied that with the success of ETF approvals and the increased legitimacy of Bitcoin, which should be seen as digital gold, citizens of countries battling high inflation could show greater interest in this area.
