In the first quarter of 2024, the cryptocurrency market has witnessed a phenomenal surge. Bitcoin, representing around 50% of the total market cap, showcased a stellar 68% gain that underscored investors' confidence in the emerging digital assets space. This period has been characterized by significant developments, including the launch of new Bitcoin spot ETFs, which have played a pivotal role in propelling the market to new heights. Here, we take a look into the driving forces behind the crypto's remarkable Q1 performance and what lies ahead for 2024.

The Launch of Bitcoin Spot ETFs

Bitcoin's performance in Q1 2024 was strong. Starting the year on a solid note, Bitcoin quickly broke through key resistance levels, attracting a wave of institutional and retail investors. A key milestone was the approval and launch of multiple Bitcoin spot ETFs. This validated the legitimacy of cryptocurrencies in the eyes of traditional investors and provided a safer and more regulated avenue for investment in Bitcoin. These ETFs have made it significantly easier for institutional investors to gain exposure to Bitcoin without the complexities and security concerns associated with direct cryptocurrency ownership and storage.

The interest has been robust, with hedge funds, family offices, retail investors and traditional financial institutions increasing their allocations to digital assets. This shift indicates a broader recognition of cryptocurrencies as a legitimate asset class and a valuable component of diversified investment portfolios.

Looking ahead for markets in 2024

The first quarter of 2024 has set a positive tone for the future of Bitcoin and the broader cryptocurrency market. Viska has addressed three key pivotal developments that underscore our positive outlook for the crypto markets in 2024:

1. The Launch of Bitcoin Spot ETFs: This milestone marks a significant milestone in integrating cryptocurrencies within traditional financial systems as we mentioned above and will continue to drive adoption of cryptocurrencies in years to come. It is likely that new investor pools have yet to access the new ETF´s as multiple advisors have yet to complete adding them to their product offering as it usually takes multiple months to approve new products.
2. The Bitcoin Halving: A cornerstone event in the cryptocurrency calendar, the upcoming Bitcoin halving is a highly anticipated event in crypto. Scheduled to occur in late April 2024, this event will significantly impact Bitcoin's fundamentals regarding the issuance of coins that won't show up on the sell side. Historically, halvings have been precursors to notable rallies in Bitcoin's price, as reduced supply and sustained demand create upward price pressure. This halving is thus seen as a technical milestone and a significant economic event which underscores the deflationary nature of Bitcoin and highlights its appeal as 'digital gold' amid inflationary concerns in traditional fiat currencies.
3. Accommodative Financial Conditions: The broader external financial environment is critical to asset performance. Current conditions suggest a favorable backdrop characterized by supportive monetary policies and liquidity conditions. This setting will likely precipitate a 'melt-up' across diverse asset classes, with cryptocurrencies, gold, and equities likely to be the top beneficiaries. Conversely, the fixed-income sector may face headwinds, mainly due to the looming threat of inflation overshooting targets in the U.S., presenting a complex landscape for bond investors.

These three pillars—each significant in its own right—collectively highlight our optimistic stance towards cryptocurrencies for the year ahead. The external environment, marked by easing liquidity conditions and accommodative monetary policies, promises to sustain this momentum. We anticipate this trend to persist and potentially intensify over the next one to two years, offering a window of unprecedented opportunity for investors.

The Future of Cryptocurrencies

As we move forward into 2024, the cryptocurrency market continues to evolve rapidly. The success of Bitcoin and the introduction of spot ETFs are likely to pave the way for further innovation and adoption in the space. However, the cryptocurrency market is still subject to volatility and regulatory developments as before.

At Viska, our commitment is to navigate these shifts, ensuring our investors are well-positioned to capitalize on the upcoming opportunities. As we move forward, Viska remains at the forefront, studying the emerging world of digital assets for years to come.