The biggest crypto trends of 2024 | Part 2
Ed Prinz is co-founder and CEO of Loob.io, a digital marketplace for blockchain assets, and chairman of DLT Austria, a non-profit organization promoting blockchain technology. This is the second part of his three-part series on “Crypto Trends 2024”. Find Part I of the biggest crypto trends here.
In the rapidly evolving world of crypto assets, two giants are in focus: Bitcoin and Ethereum. These two pioneers have not only fundamentally changed the digital financial landscape, but also continue to actively shape the future of the crypto sector. In this article, we highlight the latest developments and challenges of both crypto assets, examine their role in the global financial system, and take a look at the upcoming innovations and updates expected in 2024. As Bitcoin establishes itself as a dominant investment and store of value assets and prepares for the next halving, Ethereum is focused on breakthrough technological advances to improve its scalability and efficiency. Both continue to have a decisive influence on the dynamics and progress in the crypto sector.
We start our analysis with Bitcoin, the most valuable digital asset, followed by a detailed look at Ethereum.
Bitcoin: The Road to the Fourth Halving
Bitcoin has established itself as an important investment and store of value assets in the financial system since 2009. Its value benefits from limited availability, the most secure blockchain, and increasing adoption, making it particularly attractive in uncertain economic times. Technological advances like the Lightning Network and the Taproot update address challenges in scalability and efficiency.
The launch of the Bitcoin Spot ETF on January 10, 2024, and the upcoming Bitcoin Halving, expected around April 20, 2024, depending on the block time, mark significant events with potentially significant impact on the market. These milestones, complemented by regulatory developments, represent a turning point for Bitcoin that could encourage further growth and expansion in the financial sector.
Before we delve deeper into the main event, Bitcoin Halving, let’s take a closer look at Bitcoin mining.
Bitcoin mining and network dynamics
Bitcoin mining is a central process for generating new Bitcoins and securing the blockchain. Miners verify transactions and create new Bitcoins by solving mathematical problems known as “proof of work“. This activity ensures the integrity and security of the network, with miners receiving new Bitcoins and transaction fees as a reward.
Mining difficulty adjusts to maintain network stability, and the miner rewards halves approximately every four years, an event called “halving.” Despite the high energy consumption, there are efforts to use even more renewable energy for mining. There are concerns about the centralization of mining through large mining pools, but the network structure minimizes such risks.
Bitcoin mining companies face technical and economic challenges. Market volatility impacts profitability while increasing mining complexity requires higher computing and energy costs. Many companies are responding to environmental concerns through the use of renewable energy and energy efficiency initiatives.
Scaling offers opportunities and challenges but requires significant investment. Technological innovations are crucial to remain competitive. Ahead of the halving, which will halve rewards, companies are optimizing their operating costs and improving the efficiency of their hardware.
Technological development plays a crucial role in Bitcoin mining, both in terms of increased efficiency and more environmentally friendly practices. Innovations in mining hardware and software, such as more powerful ASICs and advanced algorithms, increase overall efficiency and reduce energy consumption. The use of renewable energies and the use of waste heat are other important aspects. These technological advances are expanding opportunities not only in mining but also in other industries such as finance and supply chain management. Overall, these developments are of great importance for the digital economy by making mining more efficient, profitable, and environmentally friendly and opening up new areas of application.
The maximum supply of Bitcoins is set at 21 million units, of which approximately 19.1 million are in circulation so far. New Bitcoins are created through a process called mining, in which a new block is added to the blockchain every 10 minutes on average, with each block generating 6.25 Bitcoins. This results in around 900 new Bitcoins every day.
An interesting facet of Bitcoin is the phenomenon of lost Bitcoins. Estimates suggest that between 3 and 4 million Bitcoins have been irretrievably lost, due to various reasons such as losing private keys or forgetting wallet passwords.
In the future, when the maximum supply of Bitcoins is reached, there will be no new block rewards for miners. Instead, miners will derive their revenue from the transaction fees that users pay for each Bitcoin transaction. This transition represents an important moment in Bitcoin’s development as it represents a shift from creating new entities to maintaining and securing the network through transaction processing.
After the halving, market consolidation could occur, with efficient miners surviving and the Bitcoin price supported in the long term by the reduced supply. Successful companies in the mining sector are those that use challenges as opportunities and act in an economically and environmentally responsible manner.
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Bitcoin Halving 2024
A crucial aspect of Bitcoin mining and a significant event for the entire network is Bitcoin Halving. Approximately every four years, the block reward that miners receive halves, which has a direct impact on Bitcoin’s economic ecosystem.
Bitcoin Halving is a pre-programmed process embedded in the design of the Bitcoin blockchain. It reduces the rate at which new Bitcoins are generated and is a crucial factor in Bitcoin’s deflation mechanism, contributing to the asset’s value stability.
The halving has a significant impact on the supply of new Bitcoins, which in turn affects the market price. The reduced availability of new Bitcoins drives their scarcity and is often discussed in the context of stock-to-flow theory. Historical data shows that halvings often resulted in significant price increases, leading to speculative bull markets and increased public interest.
Each halving marks a turning point for Bitcoin in terms of market value and public perception. Historical pattern recognition shows that halvings were often accompanied by specific market reactions that resulted in similar chart patterns and price movements.
The next halving, expected in 2024, is highly anticipated and could trigger similar market reactions to previous cycles. However, it is important to consider current market conditions and external factors and not simply project past trends into the future.
Bitcoin mining and halving are two inextricably linked aspects of the Bitcoin network. While mining ensures the ongoing security and functionality of the blockchain, halving is a key mechanism that ensures long-term value stability and scarcity of Bitcoin. Both elements play a central role in the development and economic ecosystem of Bitcoin.
The Bitcoin Halving phenomenon, which occurs every four years, has proven to be a crucial turning point for Bitcoin, both in terms of market value and public perception. Historical observations suggest that each halving brings significant price increases and associated bull markets, as well as increased public interest.
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Halvings at a glance
In 2012, Bitcoin experienced its first halving on November 28th at block 210,000, with SlushPool generating the historic block using a Radeon HD 5800 miner. The reward dropped from 50 to 25 BTC per block. On the day of the halving, Bitcoin price was around $12.35 but rose to around $127.00 over the next 150 days.
The second halving took place on July 9, 2016, at block 420,000, conducted by F2Pool, with the reward reduced from 25 to 12.5 BTC per block. Bitcoin price was around $650.63 on the halving day and increased to around $758.81 in the following 150 days.
On May 11, 2020, the third halving occurred at block 630,000, with AntPool generating the crucial block. The block reward halved from 12.5 to 6.25 BTC. The price on the halving day was around $8,821.42 and rose to around $10,943.00 in the next 150 days.
The fourth halving is expected on April 20, 2024, at block 840,000, with a reward reduction to 3,125 BTC per block.
By 2140, all 21 million Bitcoins will have been generated, with over 98% of them created by 2030. An average of 144 blocks are created every day, which corresponds to 900 new Bitcoins per day.
During halvings, some miners turn off their equipment due to lower profits, resulting in slower block production. In response, the Bitcoin network adjusts the difficulty of mining. After the halving, many miners are upgrading to more efficient machines, which improves network performance.
Adjusting hash rate and mining difficulty ensures that the network remains stable even during halvings by ensuring an average block time of around 10 minutes. Although mining becomes more challenging over time, it remains feasible. After halvings, hashrate typically sees a 20-35% decline but usually recovers within 6-12 months.
The Bitcoin network, with its fixed monetary supply and the cooperation of millions of miners, is based on mathematical principles and the social consensus that all participants follow the same rules.
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The Bitcoin Halving is a pivotal event in the Bitcoin economy that has a profound impact on miners, Bitcoin supply, and market value. Halving the block reward will immediately reduce miner revenue, impacting the profitability of mining and leading to possible market consolidation that could eliminate less efficient miners. In the long term, this could lead to centralization of mining activities among larger and more efficient players. The halving plays an important role in Bitcoin’s supply dynamics and acts as a catalyst for important price movements and market cycles. It is a multidimensional event that touches on the technical, economic and social aspects of Bitcoin and aims to avoid inflation and increase the scarcity of the currency. Understanding and analyzing the halving is crucial for anyone involved with Bitcoin and the crypto asset landscape.
After each Bitcoin Halving, the market goes through specific phases that provide in-depth insights into market cycles and investor behavior. The first phase, the consolidation phase, begins immediately after the halving. During this time, the market builds a support structure that serves as a foundation for future upward movements. This is followed by the stabilization phase, during which the market processes the reduced Bitcoin supply and the changed market conditions without reaching new high prices. These observed patterns and phases after the halving are not only indicators of market behavior but also crucial in predicting future market movements and price trends of Bitcoin. Halving is therefore a complex and multi-stage process that has far-reaching effects on the entire crypto market.
Since 2012, there have been recurring patterns in the market’s reaction to Bitcoin halvings, manifesting themselves in similar chart formations and price developments. Two noticeable patterns are the “Bull Flag” and the “Golden Cross,” which occur frequently and indicate impending price increases.
Examining the market cycles after the halvings reveals characteristic phases:
- The consolidation phase immediately follows the halving. During this phase, a supportive base structure is formed that serves as a foundation for future price increases.
- In the stabilization phase, the market price further consolidates. New high prices are typically not reached while the market processes reduced supply and changing circumstances.
The upcoming halving in 2024 raises high expectations and speculation. Historical patterns suggest similar responses to previous cycles, but with the caveat that each cycle has its own unique characteristics. The media plays an important role in shaping public perception, and it is crucial to distinguish informed analysis from unfounded speculation.
Investors should focus on non-emotional, fact-based decisions by conducting their own research and consulting various sources of information. Consideration of long-term trends and market cycles is essential for a realistic assessment of the halving effects.
The Bitcoin Halving is more than just an event; it is a complex, multi-step process with profound implications for the crypto market. The recurring patterns following halvings provide important insights for future predictions and highlight the central role of halvings in Bitcoin’s long-term performance. A balanced view, taking into account historical data, current market trends and rational considerations, is crucial to understanding and leveraging the halving.
Now we turn our attention to Ethereum, the first smart contract platform, and take a closer look at the current developments and plans for 2024.
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Ethereum at the center of crypto expansion
As 2023 comes to a close, the crypto world’s attention is increasingly turning to Ethereum. This leading smart contract platform and the second-largest crypto asset by market capitalization has established itself as a key element in crypto expansion. Ethereum is known for its flexibility and ability to support a wide range of decentralized applications (dApps), making it a central pillar in the blockchain technology ecosystem.
A new wave of crypto expansion is expected in 2024, which has the potential to lead the industry into a new bull market. Ethereum is at the forefront of this, not only because of its current market position but also because of the comprehensive network updates planned. These updates are critical as they aim to overcome some of Ethereum’s fundamental challenges, such as limited scalability and high transaction costs.
One of Ethereum’s biggest problems – its limited speed and high costs – is set to be addressed with a massive update in early 2024. This update promises to improve scalability by 10x. Improving scalability is crucial as it directly impacts Ethereum’s ability to efficiently process a larger number of transactions, making the platform more attractive to use for developers and users.
Ethereum’s scalability improvements are not only technical milestones but also have profound long-term implications for the crypto market. With increased efficiency and reduced costs, Ethereum is expected to attract an even larger user base and solidify its position as the leading platform for dApps and smart contracts. This development could have a significant impact on the entire crypto market as it could lead to increased trust, acceptance and possibly rising prices for Ether, Ethereum’s native crypto asset.
As we look forward to 2024, Ethereum is positioning itself as a central player in the upcoming crypto expansion. With planned network updates that promise significant improvements in scalability, Ethereum is on the cusp of significant changes that have the potential to transform the entire crypto landscape. These developments make Ethereum a key player in the eyes of investors, developers, and crypto enthusiasts, all of whom are eagerly awaiting the next chapter in the evolution of this revolutionary technology.
The development and future of Ethereum
Ethereum’s roadmap has stabilized significantly in recent years, which is reflected in a concretization of plans and a response to new challenges and insights. In the past, changing circumstances and new ideas led to adjustments in the roadmap, but currently, a clearer and more consistent development plan is emerging.
A key focus is on centralizing staking. It was recognized that the current structure with different pools and the difficulty of solo staking is not ideal. There is a great opportunity to redesign the staking system in a way that both reduces centralization issues and increases efficiency. For example, it is considering reducing the number of signatures required per slot to simultaneously increase efficiency and improve decentralization.
In terms of scaling and data availability, Ethereum continues to move along the expected path, albeit a little slower than initially expected. A trend toward off-chain data solutions is evident as demand is so high that even Ethereum’s expanded data availability cannot fully meet it. The security that can be achieved through off-chain solutions has proven to be higher than initially assumed.
Ethereum is continually working to improve the Ethereum Virtual Machine (EVM) and implement new features. There are no major new changes at the functionality level, apart from the off-chain data integration mentioned, but this is by definition outside Layer 1.
The Ethereum community recognizes that the roadmap must be dynamic and responsive to new information and changes. There are different levels of ideas within Ethereum, with some more entrenched than others, such as blockchain immutability and the transition to Proof of Stake.
EIP 4844, an important step towards full “thanksharding”, is planned for early 2024. This step will lay the foundation for further scaling efforts, with subsequent changes primarily being parameter adjustments or data collection improvements.
The Ethereum roadmap shows constant development to improve scalability, promote decentralization, and increase efficiency. While the first steps on this roadmap are challenging, the road ahead promises to be a smoother ride that will significantly improve the way Ethereum works. The roadmap also reflects the need to respond flexibly to new developments and challenges while preserving Ethereum’s core principles.
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Ethereum Scalability Revolution
One of the key issues Ethereum has faced since its launch concerns scalability. The platform, which supports a variety of decentralized applications and smart contracts, struggles with limited transaction speeds and high fees. These limitations have proven to be barriers to wider acceptance and application of the technology.
A significant update to Ethereum is planned for 2024, promising a revolution in the scalability of the platform. This update, known as EIP 4844 or “Proto-Danksharding,” aims to significantly increase Ethereum’s transaction capacity and reduce costs for users and developers. This improvement is expected to increase scalability by ten times.
The core idea behind the update is to implement a more efficient way of handling transactions on the Ethereum blockchain. Essentially, the idea is to create a special area in each block that is specifically reserved for Layer 2 transactions. These transactions, which take place on a secondary layer (Layer 2) and are anchored on the main Ethereum blockchain (Layer 1), can therefore be processed more efficiently and cost-effectively.
Layer 2 solutions such as Arbitrum, Optimism and ZK Sync that aim to reduce the load on the main blockchain will directly benefit from this update. By creating dedicated and optimized storage space for Layer 2 transactions, these networks can conduct transactions at significantly lower costs. This enables a larger number of transactions and makes using Ethereum-based applications more attractive and accessible.
This update has the potential to fundamentally change Ethereum. With the significant reduction in transaction costs and increase in processing speed, Ethereum could usher in a new era of adoption and innovation. These improvements are expected to make the platform more attractive to a broader user base and lead to increased usage of Ethereum across various sectors.
Ethereum’s scalability revolution, scheduled for 2024, could represent one of the most significant developments in the platform’s history. By improving efficiency and reducing costs, Ethereum not only becomes more attractive to existing users but also opens the door to new use cases and markets. This update could therefore mark a turning point in the evolution of Ethereum and the entire blockchain technology.
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Ethereum and the future of the crypto industry
Ethereum has established itself as a definitive platform in the crypto industry, and with upcoming scalability improvements in 2024, it is on the cusp of a new era of technological advancements. These developments could have far-reaching implications for the entire digital currency ecosystem and put Ethereum at the center of crypto expansion.
The planned scalability improvements are not only important for Ethereum users but also have the potential to transform the entire crypto industry. By reducing transaction fees and speeding up processing, Ethereum could accommodate a larger volume of transactions and dApps. This is expected to lead to greater adoption of Ethereum, both among existing crypto users and newcomers to the market.
The update also has a potential impact on the investment market. As its technical fundamentals improve, Ethereum could become even more attractive to investors, which could lead to an increase in its market value. Anticipating and implementing the update could lead to increased market activity and positive price developments in advance.
Another major factor contributing to Ethereum’s prominence in 2024 is the potential launch of Ethereum-based ETFs (Exchange Traded Funds). Such financial instruments would provide institutional investors with a regulated and easily accessible way to invest in Ethereum. This could lead to a significant influx of institutional capital into the Ethereum economy and further increase demand for Ether.
While the future looks bright for Ethereum, challenges also remain. The platform must continue to adapt and evolve to keep up with the rapidly changing needs of the crypto industry. Competition from other blockchain platforms also presents a challenge that Ethereum must overcome to maintain its leading position.
Ethereum is at a pivotal point in 2024 that could impact not only the future of the platform but also the direction of the entire crypto industry. With major technological upgrades and growing adoption in both retail and institutional sectors, Ethereum has the potential to play a central role in the next phase of crypto expansion. Ethereum’s ability to continually evolve and face new challenges will be critical to how it shapes this promising future.
Conclusion
In our outlook for 2024 trends in Bitcoin and Ethereum, we cannot ignore the standout event: the fourth Bitcoin Halving, which is expected to take place on April 20, 2024. This key event in the Bitcoin economy is expected to have far-reaching implications for the entire crypto industry. Halving, which halves the reward for mining, increases Bitcoin’s scarcity and has often led to significant price movements in the past. This event will not only reignite interest in Bitcoin but could also impact market conditions for Ethereum and other crypto assets as it represents a fundamental shift in the supply and perception of Bitcoin. It’s a moment of enormous significance for both investors and the industry as a whole, and one that could significantly shape the direction of the crypto industry in 2024 and beyond.
In the third part of our series we focus on the currently leading altcoins: Solana, Polygon and Cardano. Don’t miss this in-depth sequel.
Disclaimer: This is my personal opinion and not financial advice. For this reason, I cannot guarantee the accuracy of the information in this article. If you are unsure, you should contact a qualified advisor you trust. No guarantees or promises regarding winnings are made in this article. All statements in this and other articles represent my personal opinion.
