The cryptocurrency industry has had quite an eventful first half of 2024. Bitcoin hit an all-time high of $73,798 in March, according to Dow Jones Market Data, and has since fallen more than 18%. In January, the first U.S. spot Bitcoin ETF began trading, and in May, U.S. regulators took a major step toward approving an Ethereum ETF.
In April of this year, the Bitcoin network experienced its fourth “halving” event, which saw the reward for miners to successfully complete a block drop from 6.25 bitcoins to 3.125 bitcoins.
Bitcoin has fallen 0.9% over the past seven days to around $60,389, down more than 18% from its all-time high of $73,798 in March. Ethereum has fallen 2.3% over the past seven days to around $3,309, according to Dow Jones Market Data.
In the first half of this year, bitcoin rose nearly 46% and ether rose 50%, according to Dow Jones Market Data. Those gains still lag behind the performance of these assets in the first half of 2023, when bitcoin rose 83.6% and ether rose 60.7%.
In the second half of this year, the crypto market will pay close attention to the following four major events:
Rate cut path
The macroeconomic environment will likely continue to play a significant role in cryptocurrency prices in the second half of this year.
André Dragosch, head of research at ETC Group, noted that concerns about a global economic slowdown could weigh on Bitcoin, but central banks are likely to cut interest rates, which would serve as a boost for digital assets.
“In the past, you’ve seen that periods of increased money supply growth correlate with bitcoin bull markets, and periods of decreased money supply growth correlate with bear markets,” Dragosch said in a phone interview.
Without a rate cut, "economic growth will remain slow, limiting external investment into speculative markets," analysts at CCData wrote in a recent report.
Traders currently price in two rate cuts by the end of the year, with the first in September, according to the CME FedWatch Tool. However, Fed officials themselves expect just one rate cut by the end of the year, according to the “dot plot” projections released by policymakers in June.
Mt. Gox Repayment
Cryptocurrency investors will be closely watching the amount of bitcoin sold by Mt. Gox creditors after the bankrupt digital asset exchange said it will begin repaying bitcoin in July to creditors who lost assets in a hack of the platform more than a decade ago.
The news weighed on bitcoin, which is now trading at a much higher price than it was a dozen years ago, as investors worried that Mt. Gox's creditors might choose to sell off the coins they received.
Mt. Gox was founded in 2010 and was one of the earlier cryptocurrency exchanges. It was once the world's largest digital asset exchange. A 2011 hack resulted in the theft of more than 600,000 bitcoins, and the platform went bankrupt in 2014. Last year, the U.S. Department of Justice charged two Russian citizens with conspiring to launder money through hacking Mt. Gox. The exchange said in September last year that October 31, 2024 would be the deadline for basic repayments, early lump-sum repayments and mid-term repayments.
Notably, some Mt. Gox investors said earlier this year that they had received cash payments for some of the stolen assets, but repayments in bitcoin and bitcoin cash will begin this month. As of Wednesday, the exchange held about 141,687 bitcoins, worth about $8.5 billion, according to Arkham Intelligence.
However, Greg Cipolaro, head of global research at NYDIG, said the actual sell-off may not have as much impact as the market expected.
NYDIG expects that about $1.5 billion worth of Bitcoin will enter the market when the repayment occurs. While this is a large number, it may not have much impact on the price of Bitcoin given the daily trading volume of the token, which ranges from $1 billion to $1.5 billion for Bitcoin quoted in US dollars and $4 billion for Bitcoin quoted in USDT, Cipolaro wrote in a recent report.
US presidential election
Cryptocurrency investors will be closely watching the outcome of the U.S. presidential election in November and how the elected administration formulates policy around digital assets.
Cryptocurrency appears to have become an increasingly important topic during this election cycle.
Republican presidential candidate Donald Trump has changed his stance on cryptocurrencies, with the former president embracing the industry after slamming the asset in the past. Trump’s campaign began accepting cryptocurrency donations in May, while Trump has met with executives from crypto mining companies and has reportedly positioned himself as the “crypto president.”
Meanwhile, in May, dozens of House Democrats voted to approve an industry-backed regulation bill, a move many saw as a sign that Democratic lawmakers don’t want the voting public to perceive their party as anti-crypto.
Cryptocurrency ETFs
According to multiple media reports, the U.S. Securities and Exchange Commission (SEC) may approve the first Ethereum ETF as early as mid-July.
In May, the SEC approved filings from the New York Stock Exchange (NYSE), Nasdaq and a subsidiary of the Chicago Board Options Exchange (Cboe) that requested rule changes that would allow them to list spot Ethereum ETFs. But the agency has yet to approve registration statements from potential issuers.
While it is widely believed that demand for an Ethereum ETF is unlikely to be as large as that for a Bitcoin ETF, analysts expect the emergence of such a product to significantly boost the price of Ether and bring more demand to the entire cryptocurrency space.
Investors will also continue to pay attention to the investment flows of Bitcoin ETFs.
“Even though bitcoin ETFs exist in the U.S., that doesn’t mean people, especially registered investment advisors or (their) clients...are actually getting the exposure that they are currently able to get,” said Thomas Perfumo, Kraken’s head of strategy.
