1. Introduction
2. BTC Holders
3. Crypto Funding
4. Increasing Crypto Adoption
5. The April Pullback – Reality
6. Are we in a Crypto Supercycle?
7. Future Prospects

Introduction

Examining historical trends and fundamentals alone is not enough when investing in assets such as cryptocurrencies. Although these are significant, market sentiment is an even more important factor that shapes market behavior. The psychological and emotional inclinations of investors influence their choices. Knowing the sentiment of the cryptocurrency market is crucial to understanding how the attitudes, behaviors, and beliefs of investors influence price movements in this volatile market.

The crypto market often experiences bull and bear runs, which coincide with periods of both loose and tight monetary policies. Cryptocurrencies are sometimes viewed as potential hedges against inflation, although their track record in this regard remains relatively short and unproven.  Nonetheless, some developing economies that are experiencing severe inflation and currency depreciation have seen a discernible increase in the use of cryptocurrencies. The crypto markets tend to perform better during periods of low volatility in traditional financial markets, while they may struggle during times of heightened volatility.

BTC Holders

At present, about 50 million people possess Bitcoin, and every day, over 50,000 verified transactions take place. An estimated 1 billion people use cryptocurrencies worldwide. 29% of American parents in their millennial generation own cryptocurrency assets. 

According to the data, there were 79,000 more Bitcoin wallets holding a single token in January than there were in November. The collapse of the cryptocurrency exchange FTX and a sharp decline in the price of Bitcoin, which went from over $22,000 to just under $16,000 for a brief period, did not stop this growth. ‘Bitcoin Request for Comment’ (BRC-20) tokens are a sort of token standard, and while their popularity has recently increased, the number of wealthy holders hasn’t increased significantly. Just 30,000 new wallets containing one bitcoin have been added since the BRC-20 token standard was introduced in March.

Over the years, bitcoin ownership has become stratified into different tiers based on the total wealth of bitcoin held at each address. These categories are determined by the amount of bitcoin held and how it compares to the total bitcoin supply. Just three Bitcoin addresses, totaling 577,502 BTC, are currently holding amounts between 100,000 and 1,000,000 BTC. The next 102 largest owners, each with 10,000–100,000 BTC, come next and together have 2,410,577 BTC. These top 102 addresses, often referred to as whales, represent approximately 11% of the total bitcoin supply. This distribution shows how a small number of addresses with sizable holdings control the majority of Bitcoin ownership.

Crypto Funding

As of the first four months of 2024, the digital asset market has already set new annual records, primarily driven by the introduction of several spot bitcoin exchange-traded Funds (ETFs) in January. The total amount of money invested in cryptocurrency funds in 2024 has surpassed that of 2021. Despite the fact that 2021 saw Bitcoin hit a record high of almost $69,000, which led to a notable rally in the entire cryptocurrency market, this spike in inflows still happened.

As per CoinShares, the aggregate amount of money invested in cryptocurrency funds and products this year has surpassed $10.6 billion, which was the total for the whole year 2021. When the numbers are broken down by provider, BlackRock has drawn the largest inflows, totaling $12.5 billion this year. Fidelity has received inflows of about $6.8 million from investors after BlackRock. According to this data, investor confidence and interest in cryptocurrency investments have significantly increased, and BlackRock has become a major player in this market.

Despite the overall positive sentiment in the cryptocurrency market, fundraising within the crypto space experienced a notable downturn in 2023, reaching a three-year low. Over the course of the year, 1,189 funding rounds raised a total of $9.7 billion. A portion of this fall can be ascribed to the rise in project competition, which has produced higher-caliber startups. This change suggests that the niche is moving from a “blue ocean” of unexplored market potential to a “red ocean” of increased competition. 

In addition, there has been a discernible shift in venture capitalists’ preferences away from large funding rounds and towards early-stage projects. This pattern points to the need for more attention to be paid to fostering and assisting promising new businesses from the start. Additionally, the fundraising landscape has seen steady growth in BRC-20 fundraising towards the end of 2023, indicating a potential key trend for 2024. This increase raises the possibility that BRC-20 tokens and associated fundraising techniques will have a big impact on how the cryptocurrency market develops in the upcoming year.

Increasing Crypto Adoption

The United States has experienced a notable upsurge in the cryptocurrency landscape, as evidenced by a 40% rise in the percentage of owners by 2024. An estimated 93 million Americans own one or more digital assets and are actively involved in the cryptocurrency revolution. A noteworthy trend has been the increased participation of women in cryptocurrency ownership. Their ownership percentages increased dramatically, from 18% in 2023 to 29% at the start of 2024. In the same time frame, men’s ownership rates increased as well, going from 43% to 48%. The aforementioned data highlights the growing appeal and diversification of cryptocurrency investments among various gender demographics in the United States.

Looking back on the innovative year of 2023 in the cryptocurrency space, there were an astounding 580 million cryptocurrency owners worldwide, a significant 34% increase from the year before. April and May saw the strongest market growth, with monthly ownership rates rising by 5.1% and 6.7%, respectively.

The number of people who owned bitcoins increased by an astounding 33%, from 222 million in January to an astounding 296 million by December. This growth was propelled by significant developments such as the launch of the Bitcoin Ordinals protocol and the introduction of Bitcoin ETFs, which attracted considerable interest from renowned institutions like Blackrock and Fidelity.

Ethereum saw a significant uptick in owners, going from 89 million in January to 124 million by December, a 39% increase. The catalyst for this surge was Ethereum’s Shanghai Upgrade on April 12, 2023, which enabled liquid staking and withdrawals of staked ETH during the transition to Proof of Stake (POS). These changes highlight how the cryptocurrency market is dynamic and always changing due to institutional adoption and technology breakthroughs.

By the end of 2024, it is anticipated that there will be close to 950 million cryptocurrency users worldwide. The approval of the Bitcoin Spot ETF is a noteworthy turning point in financial industry development. This milestone is expected to expand and improve liquidity throughout the market in addition to legitimizing Bitcoin.

The April Pullback – Reality

It might be appropriate to classify the current correction as a bear market, given that bitcoin (BTC) fell below the $60,000 mark. This decline coincides with concerns about rising interest rates and what appears to be a lackluster debut of spot ETFs in Hong Kong, giving traders plenty of reasons to sell. Since mid-March, when it last touched an all-time high of over $73,000, bitcoin has now dropped by about 20% towards the end of April. The broader CoinDesk 20 Index (CD20) experienced a decline during the same period, dropping by 6%. Other major cryptocurrencies such as Ether (ETH) and Solana (SOL) also saw losses of 7% to 8%.

Traditional markets encountered difficulties on 30th April as a result of several U.S. economic reports that suggested the possibility of a stagflationary environment, which would be marked by accelerated price pressure and slower growth. The S&P 500 saw a 1.6% decline and the Nasdaq saw a 2% decline. The recent data has significantly reduced expectations of interest rate cuts by the US Federal Reserve due to strong economic performance in the country and higher inflation. This change in attitude is having an effect on the digital asset market.

In the days leading up to the 2024 halving, bitcoin had experienced notable price movements. This event saw the rate of new supply of bitcoin drop to 450 units per day, down from the current 900. The price of Bitcoin could rise if demand for bitcoin stays steady or even rises, potentially yielding large profits. Despite these bullish indicators, bitcoin prices have recently declined. This development could be due to the market participants sticking to “buying the rumor and selling the news” surrounding the halving event. This suggests that anticipation of the halving may have already been factored into the market, leading to profit-taking by investors following the event’s actual occurrence.

Are we in a Crypto Supercycle?

In economics, a “supercycle” refers to an extended period marked by the exceptional growth of a specific asset or sector. Unlike short-term bubbles that are often driven by hype and speculation and tend to burst relatively quickly, supercycles indicate a significant and sustained shift supported by strong underlying fundamentals over many years. These times of rapid expansion have the power to completely transform markets or industries, changing long-term investment plans and macroeconomic patterns.

Cryptocurrencies appear to have moved from being speculative assets to emerging megatrends, according to several indicators. In contrast to earlier cryptocurrency rallies that primarily benefited from initial coin offerings (ICOs) and hype, the current wave of enthusiasm is supported by actual adoption. The number of active Bitcoin addresses has been steadily rising over time, which is indicative of rising adoption and usage.

After years of skepticism, investment banks, asset managers, hedge funds, and mutual funds are now accepting cryptocurrencies as a real asset class. In response to increasing demand, a large number of these institutions have either launched or plan to offer custodial services to securely manage their clients’ cryptocurrency holdings.

After years of skepticism, investment banks, asset managers, hedge funds, and mutual funds are now accepting cryptocurrencies as a real asset class. In response to increasing demand, a large number of these institutions have either launched or plan to offer custodial services to securely manage their clients’ cryptocurrency holdings.

During the last market cycle, Bitcoin has solidified its position as the premier cryptocurrency, often likened to a digital equivalent of precious metals like gold. The story of Bitcoin as a digital store of value is mainly based on its intrinsic scarcity, which is a feature of the protocol that underpins it. The code establishes Bitcoin as a hedge against inflation similar to gold by capping the total supply at 21 million BTC. But, the digital aspect of Bitcoin also has benefits like portability, security, and transaction efficiency, which attracts early adopters.

The macroeconomic environment is creating tailwinds for the growing story of a cryptocurrency supercycle that will last a full decade. The substantial rise in government spending that has occurred worldwide since 2020 has sparked worries about future inflation and currency devaluations. Since cryptocurrencies provide a clear hedge against these kinds of situations, if even moderate inflation turns into a reality, both institutional and retail investors may shift their capital into these safe havens. The potential for this capital inflow into cryptocurrencies to quickly raise prices could lead to a prolonged period of notable expansion and uptake in the market. 

Future Prospects

In 2023, there was a notable surge in the mainstream acceptance of cryptocurrencies, marked by major financial institutions embracing digital assets. This paves the way for a possible boom in widespread adoption in 2024. It is anticipated that increased regulatory clarity in various jurisdictions will draw more conventional investors to the cryptocurrency space. Additionally, we expect a greater acceptance of digital assets in regular transactions as the stigma associated with cryptocurrencies fades. This development may result in the smooth incorporation of cryptocurrencies into international financial systems.

Global central banks have begun to pay close attention to Central Bank Digital Currencies (CBDCs). Numerous nations are expected to achieve significant advancements in the creation and implementation of their own CBDCs by late 2024. This represents a dramatic change in the way governments see and use digital currencies. While cryptocurrencies are decentralized, the emergence of CBDCs indicates a growing acceptance of digital assets. In addition, the implementation of CBDCs may simplify financial transactions, reduce fraud, and enhance the efficiency of monetary policies.

Blockchain interoperability is anticipated to become increasingly important in 2024 as the cryptocurrency industry moves closer to becoming a more integrated ecosystem. Interoperability protocols and cross-chain solutions will be essential for facilitating asset transfers and seamless communication between different blockchain networks. Projects aimed at bridging the gap between various blockchains will probably pick up steam, encouraging cooperation and spurring innovation across the decentralized environment.

In 2024, a patchwork of international regulations will emerge to define the cryptocurrency regulatory landscape. Different nations are regulating cryptocurrencies in different ways, which reflects the distinctive political, social, and economic environments in each country. While some nations have accepted virtual currencies as genuine means of exchange, others are still dubious or cautious.

The potential for increased cryptocurrency adoption exists due to the increasing clarity of regulatory frameworks. The increasing clarity of government guidelines regarding the handling of digital assets has given investors and institutions greater confidence to interact with cryptocurrencies. A major factor propelling widespread adoption and enabling established financial institutions to take a more active role in the cryptocurrency market is regulatory certainty.