Cryptocurrency market set to enter multi-trillion dollar era

The cryptocurrency market is expected to experience substantial growth in the upcoming year, entering the multi-trillion era driven by the onset of a bull run. This is reflected in the anticipated increase in the total market capitalization and the global user base of digital assets.

As outlined in the latest Bitfinex Alpha report, projections suggest that the total cryptocurrency market capitalization will vary between its current standing of $1.6 trillion and $3.2 trillion. Simultaneously, the global count of cryptocurrency owners is anticipated to rise from the current 575 million to a range of 850 to 950 million.

The move towards a new era of cryptocurrency finance has been further bolstered by an unprecedented transition from bear season to bull run. This is evident in the price surges of various cryptocurrencies, notably Bitcoin (BTC). BTC has risen over 158 percent in the past year. The ongoing bull market holds significant potential that could position BTC as a multi-trillion dollar asset class, according to Bitfinex analysts.

Experts have highlighted key metrics to monitor in 2024, including the Bitcoin fear and greed index, which reflects a shift from extreme fear to greed, a common occurrence at the onset of bull seasons. They also anticipate a sustained “extreme greed” sentiment in 2024 as BTC achieves new highs amid the bull market.

BTC’s dominance in the crypto market continues, with institutional investments anticipated to favor it, particularly in the first half of the upcoming year. Positive sentiment for BTC is rising as multiple BTC exchange-traded funds (ETF) submissions for the U.S. Securities and Exchange Commission are expected to be approved by January 2024. Experts predict that if a spot ETF for Bitcoin is accepted, it could lead to an influx of capital from major institutions and astute market players into the asset class.

Skybridge Capital founder Anthony Scaramucci predicted the BTC price would reach $100,000 a coin next year. He advised a strategy of buying and holding, where people should hold onto the cryptocurrency asset.

He argued that Bitcoin is a store of value asset, akin to digital gold, with a current market cap of $700 billion to $800 billion. If it is recognized as digital gold, its value should align with the market cap of gold, which fluctuates between $10 trillion and $12 trillion in U.S. dollars depending on the day and market conditions.

His advice aligns with forecasts from venture capitalist Tim Draper and Ark CEO Cathie Wood, who anticipate the price of BTC reaching $250,000 to $500,000 per coin. Scaramucci mentioned that if this prediction is accurate, it would make BTC worth $3.5-4 trillion, being valued as digital gold.

Mining reward halving and ‘sell the news’ scenario

While the ETF launch will bring about a wave of excitement for BTC prices, the real test will be the April mining reward halving. Miner exchange flows serve as crucial markers of market sentiment, indicating expectations for either additional increases in BTC prices or active sales of BTC to upgrade mining equipment.

Analysts foresee a sustained period of low miner exchange inflows throughout 2024, reflecting miners’ anticipation of a potential price surge following the halving event.

According to QCP Capital analysis, the expected demand may not be in the first few weeks after the spot BTC ETF is launched. This can potentially spark a “sell the news” situation in the second week of January, with opposition anticipated in the $45,000-$48,500 area and a potential decline to $36,000 points before continuing the bullish trend.