Three Things to Watch in Crypto in 2024

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2024 promises to be another crackajack year for the crypto space, with a fair few catalysts already in the works. The question is, which ones do we think are going to be the biggest ones, positive and negative?

Let’s find out.

Bitcoin Halving

2024 will see the fourth Bitcoin halving, which will reduce the mining reward from 6.25 BTC to 3.175 BTC. The purpose of this is to reduce the issuance of bitcoin to cater to the anticipated improvement in mining equipment year by year, which was part of Satoshi’s genius planning.

The Bitcoin halving will have the biggest impact on miners who use older, less efficient mining equipment. This is because the financial reward for mining Bitcoin has been cut in half yet the costs of mining Bitcoin remain the same. Less efficient mining machines will therefore be running at a loss, with the cost of operating them being more than they earn. Some miners will therefore go out of business as they can’t afford to keep operating – it’s the same as if your salary were cut in half but you were expected to do the same amount of work with the same associated costs.

In past years, the Bitcoin halving has preempted a rally in the year or two afterward, and with Bitcoin showing signs of life in late 2022, there is hope that the same will happen. JPMorgan doesn’t believe that the halving will have the same impact, however, calling it an “unconvincing” bullish narrative in November 2022.

Infrastructure Bill

The crypto element of the Infrastructure Bill comes into effect in January 2024, a bill that redefines the concept of a broker in an attempt to make crypto a much more taxable entity. The Infrastructure Bill’s Section 8062 expands the broker definition to encompass individuals or entities facilitating compensated transfers of digital assets, affecting cryptocurrency exchanges, wallet providers, developers, miners, and others.

Brokers are now required to report transfers to unknown entities, emphasizing the importance of robust Know Your Customer (KYC) and tax reporting systems. This could lead non-broker entities to register with the Securities and Exchange Commission (SEC), subjecting them to intricate reporting obligations typically associated with brokers.

Before the Act, only businesses accepting over $10,000 in cash had to file Form 8300, detailing payer and recipient info. The Infrastructure Bill broadens “cash” to include digital assets, imposing reporting obligations on anyone who receives over $10,000 in digital assets. Non-compliance will lead to civil penalties, with wilful violation designated as a federal felony, resulting in potential jail time.

Bitcoin ETF

We can’t leave a Bitcoin 2024 guide without mentioning the elephant in the room – a Bitcoin ETF. It’s all anyone has been talking about since Blackrock first nailed its colors to the mast in June, and with Grayscale beating the Securities and Exchange Commission in court over its rejection, it was only a matter of time.

The promise of a Bitcoin ETF was instrumental in pushing Bitcoin’s price up from the late 2022 doldrums of $15,000 all the way to $45,000 this year, and although many see a ‘sell the news’ event in the making, the awarding of a Bitcoin ETF will smash Bitcoin’s glass ceiling and officially prove the multitude of naysayers wrong.

With 13 companies now vying for a Bitcoin ETF, it’s clear that there is a huge expectation of fireworks, although some have predicted that having so many institutional players now in the game, Bitcoin’s price may suffer as a result.