The Wolf Den #865 - 15 Crypto Predictions For 2024

Let's dust off the crystal ball.

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In This Issue:

1. 15 Crypto Predictions For 2024

2. BTC Thoughts And Analysis

3. Altcoin Charts

4. Legacy Markets

5. Check Out This Bitcoin ETF Tracker

6. The SEC Issues A Pathetic Warning

7. Tether Is Freezing Sanctioned Wallets

8. How Decentralization is Overtaking Centralized Systems - Insights from OKX's President, Hong Fang

15 Crypto Predictions For 2024

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As the year draws to a close, one of my favorite aspects is covering major industry players sharing their predictions for the upcoming year. This not only relieves the pressure on me to appear insightful but… let's face it, their research is likely more comprehensive than mine. In today’s intro, I am going to briefly share “VanEck’s 15 Crypto Predictions For 2024.”

While I may not fully agree with every prediction, I do find VanEck's logic and research commendable. Each segment includes quoted bullet point highlights and a brief comment on my stance. It's important to note that none of this constitutes financial advice; these are simply entertaining predictions for educational purposes only.

1. The long-awaited U.S. recession will finally arrive, but so will the first spot Bitcoin ETFs!

• U.S. leading indicators are now in recessionary territory after 19 months of consecutive declines, close to a record. 

• As debt levels are more concerning at the sovereign than corporate or household levels, we expect more than $2.4B will flow into newly approved US spot Bitcoin ETFs in Q1 2024 to keep the Bitcoin price elevated.

• Lastly, we note that Coinbase charges retail traders all-in transaction fees of ~2.5%. We believe spot Bitcoin ETFs will likely trade at ~10bps spreads, with zero commission at many brokerages. When was the last time a 10x cost reduction didn't catalyze MUCH higher penetration for new tech?

I agree with VanEck on this segment; the prospect of a Bitcoin ETF indeed appears highly likely, and the conservative calculation of inflows, mirroring GLD's, makes sense. As far as a recession, I largely agree, although I think the election year could help keep kicking that can down the road.

2. The 4th Bitcoin halving will occur with minimal drama.

• The four-year Bitcoin halving will proceed without a major fork or missed blocks in April 2024.

• After the halving, we expect at least one publicly traded miner to be 10x by the end of the year.

I agree; the halving is expected to unfold in a manner consistent with past cycles, influencing the bull market over time. While it's challenging to definitively assert that a miner will experience a 10x increase, considering Coinbase's recent growth, such a scenario seems plausible.

3. Bitcoin will make an all-time high in Q4

• In the second half of 2024, Bitcoin will climb a Presidential-sized wall of worry.

• Thus, after a combative election that saw Donald Trump win 290 electoral votes and regain the Presidency, raising optimism that the SEC's hostile regulatory approach will be dismantled, we think the Bitcoin price will reach an all-time high on November 9th, exactly 3 years to the day from its last all-time high.

• (Recall that Bitcoin’s breakout in November 2020 also came exactly three years to the day from its November 2017 top). If Bitcoin reaches $100k by December, we make a long-shot call that Satoshi Nakamoto will be named Time Magazine's "Man of the Year."

I agree with the idea that Bitcoin could reach an all-time high in 2024, but pinpointing a specific quarter appears challenging. The multitude of analysts predicting a late 2024 all-time high has sparked my skepticism, making me consider the possibility of an earlier surge - or of a delay until 2025. There seems to be little holding Bitcoin back from a potentially epic run either late this year or early next.

4. Ethereum won’t flip Bitcoin in 2024

• Ethereum will fail to flip Bitcoin in 2024, but it will outperform every mega-cap tech stock

• Argentina will join El Salvador, the UAE, Oman, and Bhutan as the fifth country to sponsor Bitcoin mining at the state level, as Argentina’s state-owned energy giant YPF may indicate interest in mining digital assets with stranded methane and gas.

• Despite a strong performance in 2024, ETH will lose market share to other smart contract platforms with less uncertainty surrounding their scalability roadmap, such as Solana.

I agree with the sentiment that Ethereum’s market cap is unlikely to surpass Bitcoin in 2024, but I stand by the currently unpopular belief that a 'flippening' is still possible in the future. The adoption of a Bitcoin standard by Argentina could potentially reignite a compelling narrative, making it challenging for Ethereum to outperform. However, I believe Ethereum will have its time to shine for an extended period in this bull market.

5. ETH L2s will capture the majority of EVM-compatible TVL and volume post-EIP-4844

• Ethereum will implement EIP-4844 (proto-danksharding), which will reduce transaction fees and improve scalability for layer 2 chains such as Polygon, Arbitrum, Optimism, and others.

• Within 1 year of the upgrade, Ethereum L2s will consolidate down to 2-3 dominant players as measured by value and usage. 

I agree, and while I don't hold a strong opinion on this prediction and have limited knowledge about Ethereum's upcoming EIPs, VanEck’s predictions seem to be a plausible scenario.

6. NFT activity will rebound to an all-time high.

• Monthly NFT volumes will approach a new all-time high as speculators return to crypto and gravitate toward top NFT collections on Ethereum, improved crypto games, and new Bitcoin-based offerings. 

• Despite ETH's nearly 50-1 ratio vs. Bitcoin in primary NFT sales since inception, Bitcoin's Ordinals protocol and emerging layer 2 chains on Bitcoin will drive a continued rebirth in Bitcoin network fees.

• The ratio of ETH-to-BTC primary NFT issuance will end in 2024 closer to 3-1.

I neither agree nor disagree with this set of predictions. While I wish the best for NFT holders, it's difficult for me to visualize volumes surpassing their all-time highs in 2024. If VanEck presented a case for 2025, I might be more inclined to agree. Moreover, the prospect of Bitcoin narrowing the gap from 50-1 to 3-1 in NFT issuance appears particularly unlikely.

7. Binance will lose the #1 position for spot trading.

• OKX, Bybit, Coinbase, and Bitget will emerge as well-funded competitors with the potential to grab the #1 spot.

• With Binance now facing a 3-year DOJ colonoscopy, Coinbase's international futures market will gain share and surpass $1B/day volume, up from ~$200M/day in November 2023.

I agree with the assessment, although I'm uncertain about which exchange will ultimately take the throne. Given that Coinbase is more visible to me, being U.S.-based, I am more informed about its developments than those of its competitors. The comment about the ‘DOJ colonoscopy’ Binance is facing was spot on.

8. Stablecoin market cap will reach a new all-time high as USDC reverses share losses.

• More controversially, USDC will flip USDT, as more institutional adoption will reveal a preference for USDC already evident on newer L2 chains.

• Tether’s market share losses may finally materialize after the U.S. U.S. Department of Justice (DOJ) takes enforcement against Justin Sun & Tron for Know Your Customer (KYC) infractions, terror financing, and/or market manipulation.

I'm taking a risk and disagreeing with this prediction. While I acknowledge the high possibility of being proven wrong, I believe Tether has demonstrated structural soundness and transparency, surpassing the credit it receives from the industry. Despite potential setbacks related to Justin Sun, Tether may very well retain its position.

9. DEX market share of spot trading will reach new all-time highs.

• Decentralized Exchange (DEX) market share of spot crypto trading will rise to an all-time high as high-throughput chains like Solana improve the on-chain trading experience for users.

I agree. This shift would necessitate Bitcoin moving beyond the spotlight, with Ethereum, Solana, and other market players adopting strong narratives to drive momentum. Such a transition seems plausible and likely to occur.

10. Remittances and smart contract platforms will power a new Bitcoin yield opportunity.

• Given the use of the Bitcoin and layer 2 Lightning (LN) network in some remittance corridors, "Bitcoin Staking" will become a narrative in 2024.

• In addition, Bitcoin holders will be given a new business opportunity in 2024 as a provider of security to Proof of Stake blockchains.

• Utilizing projects like Cosmos-based Babylon, which will enable BTC holders to earn yield by offering non-custodial staking of PoS chains, Bitcoin holders will be able to earn yield on their Bitcoin and potentially participate in an array of other productive use cases for their BTC.

I disagree. Perhaps due to a lack of sufficient information on Bitcoin's DeFi developments, these 'use cases' feel somewhat divergent from Bitcoin's core mission in my view. While I'm open to the possibility of being proven wrong and witnessing Bitcoin's DeFi maturation, I currently find it challenging to see this direction gaining significant attention or viability.

11. A breakout blockchain game will finally arrive.

• Blockchain gaming will see at least one title surpass 1 million+ daily active users, demonstrating the long-awaited potential.

I agree. However, the emergence of a breakout blockchain game faces numerous hurdles. Introducing real investable economies is a complex task, and preventing issues like botting and farming poses a new set of challenges. If it doesn't happen in 2024, the trend towards blockchain-based gaming could likely gain traction in 2025.

12. Solana will continue to outperform ETH as DeFi TVL returns.

• Solana will become a top 3 blockchain by market cap, Total Value Locked (TVL), and active users.

• Fueled by this rise, Solana will join the spot ETF wars thanks to a flurry of asset managers submitting filings.

I agree with this perspective. While Ethereum maxis might not love this, Solana is making all the right moves to position itself as a formidable competitor in this bull market. Positive developments appear to be on the horizon for Solana.

13. DePin networks see meaningful adoption.

• Multiple decentralized physical infrastructure (DePin) networks will see meaningful adoption that captures the public's attention.

• Hivemapper, the decentralized mapping protocol aiming to bootstrap a community-owned competitor to Google Streetview, will map its 10 millionth unique KM, surpassing 15% of global roads capacity. 

• Helium, the decentralized network of wireless hotspots, will reach 100k paying subscribers for its nationwide US 5G plan, up from 5k currently.

I neither agree nor disagree, but I find these ideas intriguing. The segment is somewhat speculative and centered around altcoins, prompting some internal debate on its inclusion. Nevertheless, I've opted to share it, allowing everyone to form their own opinions because these use cases appear to have potential real-world applications.

14. New accounting treatment will rejuvenate the case for corporate crypto holdings.

• Coinbase will become the first publicly traded company to break out and report Layer 2 blockchain revenues in its quarterly filings as its Base Protocol crosses $100M+ in annualized revenues and becomes a meaningful contributor to the business. 

• Due to these accounting changes, which take effect in 2025 but can be adopted by corporates earlier, a major, non-crypto financial entity (bank, exchange) may announce the creation of a quasi-public blockchain like an L2, with the possible bridging capability to public blockchains by authorized participants.

I agree that accounting rules are likely to become more favorable as the crossover between traditional finance and crypto becomes increasingly entangled. Michael Saylor is playing a significant role in this regard, and his efforts may inspire more companies to follow suit. This narrative holds substantial weight and could gain further attention when the public takes advantage of it.

15. DeFi Reconciles with Know Your Customer (KYC)

• KYC-enabled and walled garden apps like those using Ethereum Attestation Service or Uniswap Hooks will gain significant traction, approaching or even flipping non-KYC applications in user base and fees.

• The additional volume from KYC-gated hooks will significantly bolster protocol fees by allowing new entrants to participate in DeFi without the fear of interacting with OFAC-sanctioned entities. 

I agree, although I admit this is outside my expertise. Nevertheless, I believe that if Uniswap becomes more compliant, it has the potential to attract capital from investors and larger players who may have been avoiding it until now.

There you have it. It will be interesting to circle back in a year and see how well they did.

Bitcoin Thoughts And Analysis

WEEKLY CHART

Bitcoin corrected - hard and fast. It dropped from just under $44,000 to just above $40,000 in less than 2 hours, a significant move that flushed roughly $300M longs out of the market. When we see open interest and leverage build up, the opportunity is always there for someone to make a lot of money liquidating them quickly with sizable orders in the spot market.

As you know, I was watching bearish divergence and overbought conditions on lower time frames last week, so this is no surprise.

A lot of altcoins have actually held up exceptionally well or even risen during this period, which is encouraging that we are not suddenly in a "bear market" or have not seen a bearish rotation in sentiment.

For now, I view this as a simple flush, currently holding the key area around $42,000.

A number of lower time frames still do not quite hit oversold, so I would love to see a bit more downside to really reset the indicators. Just above $38,000 is a very logical area, if we can get it.

For now, we have a decent bounce and little to fear.

Altcoin Charts

For those who are new here, I share SETUPS and not SIGNALS. These are ideas that I am watching - if a certain thing happens, then the trade triggers. I am not telling you what to buy or when. I am showing you how I am watching certain charts and what has to happen for me to take a trade.

INJ/USDT

Injective has continued to show incredible strength, even when Bitcoin corrects. As you can see, price is roughly 10% off of the ALL TIME HIGH, when most altcoins are still down 80-90% from their peaks.

A break above $25.306 would be a blue sky breakout in search of new all time high, one of the best trades their is. We want to see a close above that level.

Other key levels shown on the weekly.

Legacy Markets

• Stocks Make Cautious Start to Event-Packed Week: Markets Wrap

Global equities have had a cautious start to a week brimming with crucial economic data and central bank meetings, which are expected to heavily influence investor sentiment regarding future interest rate movements. The Japanese yen has weakened, mainly due to the Bank of Japan's reluctance to abandon the world's last negative interest rate, owing to a lack of evidence connecting wage growth to inflation.

In the United States, the focus is on imminent economic data releases, including inflation numbers, the Federal Reserve's policy decision, and retail sales figures. Similar policy decisions from the European Central Bank and the Bank of England are also in the spotlight.

While central banks are anticipated to resist rate cuts, there's a prevailing view that any significant increase in rates, which could negatively affect the market's upward trajectory, is unlikely. European stocks and US futures remain stable, mirroring the steadiness in Asian equity indices. Notably, Macy's Inc. shares surged in premarket trading after a notable buyout offer, and Snap Inc. experienced a rise after receiving an upgrade.

Chinese stocks displayed volatility, influenced by government fund speculations and recent data showing a sharp decline in consumer prices and producer costs. The S&P 500 in the US continues its upward trend, with varied forecasts from analysts about its future performance.

In the commodities market, oil prices have seen a modest increase after a period marked by supply outstripping demand. In the realm of cryptocurrencies, Bitcoin demonstrated its usual volatility with a sharp but brief drop toward $40,000 amidst a wider crypto selloff. This week is shaping up to be a defining period for global financial markets, with various factors at play impacting currencies, equities, and commodities alike.

Key events this week:

• Argentina new President Javier Milei expected to call congress into extraordinary session, Monday

• UK’s CBI publishes latest economic forecast, Monday

• RBA Governor Michele Bullock speaks, Tuesday

• Japan producer prices, Tuesday

• India inflation, Tuesday

• Brazil inflation, Tuesday

• UK unemployment, Tuesday

• US inflation, Tuesday

• Eurozone industrial production, Wednesday

• Brazil rate decision, Wednesday

• Federal Reserve rate decision, Wednesday

• Australian unemployment, Thursday

• ECB rate decision, Thursday

• BOE rate decision, Thursday

• Norway rate decision, Thursday

• US retail sales, Thursday

• China 1-year MLF, Friday

• China retail sales, industrial production and jobless rate, Friday

• Eurozone PMIs, Friday

• UK manufacturing PMI, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 was little changed as of 9:34 a.m. London time

• S&P 500 futures were little changed

• Nasdaq 100 futures were little changed

• Futures on the Dow Jones Industrial Average were little changed

• The MSCI Asia Pacific Index was little changed

• The MSCI Emerging Markets Index fell 0.2%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%

• The euro was unchanged at $1.0763

• The Japanese yen fell 0.9% to 146.19 per dollar

• The offshore yuan was little changed at 7.1936 per dollar

• The British pound was little changed at $1.2558

Cryptocurrencies

• Bitcoin fell 3.3% to $42,379.44

• Ether fell 4.8% to $2,247.1

Bonds

• The yield on 10-year Treasuries advanced two basis points to 4.25%

• Germany’s 10-year yield declined two basis points to 2.26%

• Britain’s 10-year yield was little changed at 4.04%

Commodities

• Brent crude was little changed

• Spot gold fell 0.6% to $1,993.35 an ounce

Check Out This Free Bitcoin ETF Tracker

• Bitcoin ETF Tracker

Blockworks has developed a user-friendly Bitcoin ETF tracker, which consolidates all live futures ETFs and pending spot ETFs into a single, convenient platform. This tool will prove to be particularly valuable for comparing the performance of various ETFs against each other and benchmarking them against existing futures ETFs. Once the Bitcoin ETFs are sorted, I expect there to be a tracker for Ethereum ETFs, fingers crossed.

The SEC Issues A Pathetic Warning

• SEC issues new investor warning over crypto assets

In an interesting turn of events, the SEC has released a warning advisory via its Office of Investor Education and Advocacy, addressing the many ‘risks’ associated with what Gary Gensler has termed "digital asset securities." Although this phrase seems to be an entirely made-up way to describe digital currencies, in the context of crypto ETFs, I can see the logic behind it. I guess what particularly matters about this warning is that the last instance of the SEC issuing such a warning was right before approving the Bitcoin futures ETF. Regardless, the entire advisory gives off the stench of a last-ditch effort, almost as if it's an attempt to cast a negative light on the space just before the SEC is compelled to approve the ETF applications.

Tether Is Freezing Sanctioned Wallets

• Tether freezes all OFAC-sanctioned wallets in 'proactive' security measure

Tether has announced the freezing of crypto wallets belonging to individuals sanctioned by the U.S. Office of Foreign Asset Controls. This proactive measure aims to prevent potential misuse of Tether tokens and enhance security. Tether clarified that existing wallets on the OFAC list and any newly added wallets will be subject to the freeze. The move, attributed to CEO Paolo Ardoino, is framed as an expansion of the company's collaboration with global law enforcement and regulators, marking one of the first significant decisions under Ardoino's leadership.

How Decentralization is Overtaking Centralized Systems - Insights from OKX's President, Hong Fang

Join me in this insightful episode of The WOAS Podcast as we sit down with Hong Fang, the President of OKX, one of the leading figures in the world of decentralized platforms. In this engaging discussion, Hong Fang delves into the intricate challenges of navigating the complex regulatory landscapes that govern these innovative digital spaces. We explore the significant shifts in institutions and capital flow, moving towards key regions like Asia, Dubai, and Europe, and how these changes are shaping the future of decentralization.

Amidst the uncertainties brought about by evolving regulatory changes, Hong Fang shares her excitement for what lies ahead. She highlights the importance of continuous technological investment and the resilience of her team, underlining OKX's unwavering commitment to excellence in an ever-changing environment.

We also dive deep into the potential convergence and divergence of regulatory requirements on a global scale. Hong Fang voices her hopes for clear legislative guidance, emphasizing the need for a sensible approach to protect individuals in the decentralized world. This episode is a must-listen for anyone interested in understanding the dynamic landscape of decentralization and the future it holds. Join us as we unravel the complexities and discover the opportunities that lie ahead in this evolving digital era.

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The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.