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"Preamble: 2023, the Year of the End of the Bear Market

As of January 1, 2023, the cryptocurrency industry was barely recovering from a monumental hangover. Following the bankruptcy of FTX, one of the darkest chapters in its short history, and grappling with the collapse of Terra/LUNA, the bankruptcy of Celsius, and the Three Arrows Capital incident, it was high time for 2022 to come to an end.

While a Bitcoin at $16,000 might be a tempting opportunity for some, it's fair to say that crowds were not flocking to buy at this price. Given the past year, few had anticipated the scenario that 2023 had in store for the cryptocurrency market, even among the most optimistic.

A year later, on January 1, 2024, Bitcoin was trading for over $45,000, validating a performance of 150%, the best across all asset classes. Within our ecosystem, a mere 365 days seemed to have been enough to overshadow the past catastrophe and foster hopes for the much-anticipated 'bull run' comeback."

While 2023 concluded on an exciting note, 2024 kicked off with a bang as the first-ever approval of a Bitcoin spot ETF in the United States occurred. Anticipated for over a decade by investors, this event marks a major turning point for Bitcoin. It symbolizes institutionalization, recognition from U.S. regulators, and simplified accessibility to this new asset class. From the acceptance of Bitcoin spot ETFs to the approaching halving, along with an expected pivot from the Fed in the coming months, the stars seem aligned for a bullish resurgence in the cryptocurrency market in 2024. In this feature, we offer a projection for the upcoming year and a in-depth study of the trends that could animate the industry.

Bitcoin: Layer 2, DeFi & BRC-20
Although the conditions seem optimal for a continued bullish trend in the cryptocurrency market in 2024, numerous macro-economic and geopolitical uncertainties still weigh, and it would be dishonest not to mention them. Risks of a real estate crisis in the United States, armed conflicts worldwide, the possibility of an economic recession, or the rise in oil prices could disrupt optimistic scenarios. In this scenario, will the price of Bitcoin react like risk markets, or on the contrary, will it don its safe-haven cap? It's difficult to answer with certainty.

One thing is certain, Bitcoin's thesis becomes increasingly evident over the years. The approval of Bitcoin spot ETFs in the United States is proof of the recognition of this asset class and will enable millions of American savers to invest in a regulated and secure manner. Additionally, the 4th Bitcoin halving scheduled for late April, historically followed by a bullish period, and while its impact tends to diminish over events, the theory of the self-fulfilling prophecy should not be underestimated.

However, that's not the only reason for the inclusion of Bitcoin in this feature. The grand entrance of the Ordinals protocol served as a reminder that Bitcoin is the king, and any trends related to it can quickly gain immense momentum. Digital artifacts (enhanced NFTs) and BRC-20 (the first tokens on Bitcoin) have secured top positions in their respective categories' market capitalizations, and this trend could continue in 2024.

Among the key initiatives revolving around Bitcoin, we can highlight:

BRC-20 tokens: These are gradually being listed on major centralized exchange platforms, although their intrinsic utility is yet to be defined.
Bridges: They facilitate the transfer of BRC-20 tokens between Bitcoin and other ecosystems (Ethereum, Solana, Avalanche, etc.).
Layer 2 solutions: These aim to integrate decentralized applications built on the Bitcoin network.
Decentralized Finance (DeFi) protocols, also known as OrdFi: via the Ordinals protocol or other similar initiatives.

Ethereum and the ZK Rollups Season

While the cryptocurrency market saw an upward trend in 2023, Ethereum (ETH) left investors with a bitter taste. In the span of 365 days, the price of ETH underperformed Bitcoin by nearly 30%, despite a notable 94% performance against the US dollar.
In recent years, Ethereum's narrative has evolved. The goal is no longer to achieve a high level of scalability directly on the main layer but rather through second-layer solutions. While Optimistic Rollup solutions like Arbitrum and Optimism are already operational, there is strong anticipation for ZK Rollups, which some believe to be more efficient and promising.

Ethereum's co-founder, Vitalik Buterin, also supports the idea that the network's future lies in layer 2 solutions. Nevertheless, he believes that transaction costs for these second-layer solutions should not exceed 5 cents to be 'truly acceptable.' Currently, we are still far from that, as shown in the graph below.
This is the main criticism Ethereum faces: high network fees that exclude small wallets and frustrate users. However, it is likely to change in 2024 with The Surge. Specifically, this update will involve the implementation of EIP-4844 (going by the sweet name proto-danksharding). Simply put, this will drastically reduce transaction fees, making Ethereum and its layer 2 solutions much more accessible.

If the approval of spot Bitcoin ETFs was the highly anticipated event at the beginning of this year, it might be followed by another event that will also be closely watched. The approval of spot ETFs for the second-largest global cryptocurrency, Ether (ETH), could also cause a stir.

At least, that's what the venerable financial institution Standard Chartered believes. They anticipate that the United States Securities and Exchange Commission (SEC) will follow a similar strategy as they did for Bitcoin ETFs. The response deadline has indeed been set for May 23 for the applicants. The SEC might decide to reject applications until this deadline, only to mass-approve several ETFs later.

👉 To delve deeper - What is a Bitcoin (BTC) ETF?

However, ETH ETFs might differentiate themselves from Bitcoin ETFs. Some of them could follow the model of BTC ETFs, but others might include staking rewards, which could pose more legal challenges. According to Geoffrey Kendrick, Head of Digital Asset Research at Standard Chartered, this second option could be proposed later.

Furthermore, he points out that the giant Grayscale has filed for an ETH ETF. We recall that for Bitcoin, Grayscale appealed against the SEC's initial refusal. The SEC might want to avoid a second appeal for ETH if it were to reject this second ETF application

An ETH Touching $4,000

While BTC ETFs have not yet caused a surge in Bitcoin prices, their effects are to be observed over the long term. Additionally, the surge in BTC was observed in the weeks leading up to approval. According to Geoffrey Kendrick, Ethereum ETFs could propel the price of Ether (ETH) with a similar scenario:

"If ETH prices behave similarly to BTC prices while awaiting ETF approval, ETH could trade up to $4,000 by then."

As a reminder, the historical high for ETH is $4,800, reached in November 2021. 'StanChart' is quite optimistic about the prices of major cryptocurrencies. In November, it estimated that BTC could reach $100,000 by the year 2024. Furthermore, it showed its commitment to blockchain by launching a tokenization platform in the same month. The bank seems to be betting on cryptocurrencies.
: anticipates strategy, potential surge to $4,000, and remains on major .

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