Currencies

What Does The Recent Bitcoin Surge Mean For Digital Currencies?

In the past few weeks, Bitcoin has once again dominated headlines after reaching an all-time high of $73,835.57 on March 14, 2024.

This rise happened off the back of a crazy few years for the crypto industry, driven by new regulations and high-profile criminal cases. But what was once seen as a volatile asset has now once again shown that its value holds the test of time. As its value continues to rise, it forces us to question: what does this mean for the future of digital currencies?

First, let’s dive into recent events.

 

Why Did Bitcoin Suddenly Rise?

 

As the world struggles with high-inflation rates, investors are continuously looking for ways to secure higher returns. However, as global economies start to announce a slow but steady decrease in inflation, coupled with the recent bull run of the American economy, investors are starting to come more confident in historically riskier investments.

This, combined with the introduction of Bitcoin ETFs, backed by huge companies like BlackRock, as well as recent rulings in favour of crypto against the SEC, mean it’s beginning to be more widely accepted as a mainstream investment option.

A History Of Volatility

 

With such a volatile history, it’s unsurprising that Bitcoin has been approached by many with scepticism. From starting out at just $0.30 per coin in 2011 to its current price of over $67,000, it definitely hasn’t been plain sailing all the way.

Having battled ongoing regulations, market dynamics and criminal cases, it’s those that have bought and held the currency through these peaks and troughs that have reaped the rewards.

 

 

The Future Of Digital Currencies

 

But what does this mean for the future of digital currencies? We asked the experts. Let’s see what they had to say…

 

Bryan Tan, Partner at Reed Smith

 

“The main driver behind the recent surge in crypto has been the Fed’s approval of spot bitcoin ETFs as funds have loaded load up on bitcoin. With other countries watching developments in the US keenly and taking a wait and see approach to large scale institutional crypto investment, we could see rapid growth in the near future if they decide to follow suit. Following the news this week that the FCA has allowed crypto-related securities, we are already starting to see movement in this area.

“We are beginning to see renewed interest in crypto and unlike previous run-ups of bitcoin, the latest surge has come against a backdrop of increasing regulatory clarity over crypto, as opposed to the previous runs, which were based on bitcoin thriving in unregulated environments. Is this the long-awaited watershed moment of the main streaming of crypto?”

 

Siam Kidd, Author of The Crypto Book

 

“A common misconception that the public has about markets is that price changes things. It doesn’t. Of course, price will influence traders to do things but in the bigger picture, it’s the underlying macro behind the scenes that dictates things.

“If a company builds a great product, launches and sells loads, great. Revenue is up and eventually the ‘market’ will realise and price then shoots up!

“So with Bitcoin sat nicely above old ATHs, this is because of the fundamentals. Blackrock et al have piled in with their Spot ETFs and haven’t slowed down their hoarding of it. So of course the price will rise. And it will continue to do so as the average Joe is slowly waking up to the fact that fiat currencies have the worst tokenomics and are like holding an ice cube in the Sahara Desert!

“Bitcoin IS the strongest globally scaled asset there is right now and the Power Law is dictating a cycle high around $200k-$250k by the end of 2025.

“What does all of this mean for the future of digital currencies? Legitimacy. The big boys mocked it incessantly then realised they messed up. It’s not too late to front them folks!”

 

Prajesh Patel, Director at ADL Estate Planning

 

“Digital currencies are one of the riskiest asset classes you can invest in, so the recent price surge isn’t surprising. It was caused by short-medium term factors which won’t significantly alter their ultimate trajectory.

“The future of digital currencies is certainly interesting, with some even hailing it as the future of money. The regulatory landscape is changing to accommodate this fast-growing area, however, there are still challenges in regulating it sufficiently for mainstream use.

“A digital currency’s main attraction is that it is decentralised, and at the moment, our entire economy operates on centralised systems with the central banks.

“Various governments are tackling this by launching their own currencies. A Central Bank Digital Currency (CBDC) deployed in their economies, offering cutting-edge transparency, speed and efficiency.

“The other significant challenge that participants need to overcome is interoperability, which is the sharing and coordination of data across multiple participants. If you’re creating a currency that has no way to connect with what’s already there, it’s a losing battle. If we can crack interoperability, then the future of digital currencies looks bright.”

 

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Evgeny Filichkin, Investment Advisor at Keytom

 

“The recent surge in the crypto market can be attributed to several key factors. Firstly, the anticipation surrounding the upcoming halving event in April has stirred considerable excitement among investors. The understanding that the influx of new Bitcoins will decline has prompted investors to accumulate more BTC ahead of the event. This leads to heightened buying pressure and an upward price trajectory.

“Additionally, a growing market sentiment suggests that the US Federal Reserve’s interest rate hikes are nearing their end. This scenario often supports investments in riskier or alternative assets such as Bitcoin. Since Bitcoin is considered the benchmark for all other cryptocurrencies, the growth of interest in it subsequently boosts the prices of altcoins, as well.

“Moreover, the broader adoption of digital currencies is progressing steadily, supported by favorable regulatory developments in jurisdictions like Hong Kong, where cryptocurrencies are being recognised as a full-fledged means of payment. These advancements contribute to bolstering investor confidence in crypto, validating their intrinsic value and fueling further growth.

“The more investors recognise the value of digital currencies, the more their portfolios are allocated to these assets as a diversification tool in the face of current global economic uncertainties. This trend signifies the evolving perception of digital currencies as an independent asset class, presenting significant opportunities for their future growth and adoption.”

 

Pat Doyle, Blockchain Researcher at Amberdata

 

“Historically, each significant advancement in the cryptocurrency market is preceded by extensive periods of foundational development. In the current cycle, growth is predominantly driven by the institutional embrace of the BTC ETF, marking a pivotal shift in investment strategies. The years 2022 and 2023 were characterised by the development of essential infrastructure and the attainment of regulatory approvals, setting the stage for a transformative year in the crypto domain.

“This trend signals a highly optimistic long-term outlook. It paves the way for the introduction of new ETFs tied to additional cryptocurrencies, such as Ethereum, further expanding the investment landscape. Moreover, it is anticipated that there will be an emergence of derivatives based on these ETFs, adding layers of complexity and opportunity to the investment sphere.

“Concurrently, the Ethereum staking environment is undergoing a phase of maturation, offering investors the prospect of a comparatively “risk-free” yield in ETH. This is underpinned by significant protocol upgrades (the merge), which has birthed a whole new market of liquid staking derivatives which offer investors the exposure to ethereum staking yield without having to maintain the hardware to stake.”

 

Alexander Mamasidikov, Founder and CEO at CrossFi

 

“The latest crypto surge is not the beginning of a bull run, as many experts predict. This is not a surge in retail buyers. The situation in the crypto market is still uncertain. The real reason for the crypto surge is related to the situation around Bitcoin ETFs. I believe that this can have a bad effect on the crypto market, since funds have accumulated too many assets, and they can bring down the market at any moment.

“We are witnessing a situation of a surge in the crypto market, which is not related to the growth of real interest of buyers in cryptocurrencies. At the same time, more and more institutional investors and large organisations are entering the crypto market.

“According to my forecasts, the future of digital currencies is moving towards clear government regulation. All signs show that Bitcoin will be used as a reserve currency in the world in the future. And new CBDCs will be created based on it. This will lead to significant changes in the crypto market in the near future.”

 

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Andrew Saunders, Chief Strategy Officer at Hashflow

 

“I believe the latest surge is a strong signal of the enduring relevance of crypto in the global financial landscape as well as the transformative power of blockchain and decentralised applications. Since Bitcoin’s rise in 2009, we’ve been through 4 separate market cycles, and the industry has bounced back after each bear market with a vengeance every single time — not only in asset prices but also in adoption and on-chain activity.

“As a point of reference, Hashflow, a decentralised exchange aggregator, has continued to grow its overall trade volume since 2022 despite the bear market with continued upward momentum in the first quarter of 2024. I believe this can be yet another signal reinforcing the overall growth narrative of the industry. In addition, the recent surge could further catalyse innovation in the space, driving the development of new use cases and applications.

“Restaking, modular architectures, decentralised physical infrastructure networks (DePIN), tokenised real-world assets (RWAs), and artificial intelligence have already emerged as leading categories at the dawn of this new bull market. I wouldn’t be surprised to see even more new categories in 2024 and beyond.”

 

Pranav Maheshwari, Sr Solutions Architect from Edge & Node

 

“The latest surge in the crypto market signals a significant milestone for the future of digital currencies. It underscores the growing acceptance and adoption of cryptocurrencies as legitimate assets and forms of payment. This surge not only validates the resilience and potential of digital currencies but also highlights their role as a hedge against traditional financial systems and inflationary pressures. Moreover, the increased mainstream interest and investment in cryptocurrencies signify a shift towards blockchain technology, promising greater financial inclusion and sovereignty for individuals worldwide.

“To add to this a key driver of this surge is the approval of the first Bitcoin Exchange Traded Funds (ETFs) in the US in late January 2024. This decision by the Securities and Exchange Commission (SEC) brings more legitimacy to the cryptocurrency industry and opens it up to a wider range of investors, including institutional investors. This influx of capital is likely fuelling the current rise in prices.

“Looking ahead, the future of digital currencies appears bright. The ETF approval, combined with continued mainstream interest, could lead to mass adoption of cryptocurrencies. This could in turn play an increasingly prominent role in reshaping the global financial landscape, driving innovation, and empowering individuals with greater financial autonomy.”

 

Fadi Al Kurdi, Founder and CEO at FFA Kings

 

“The recent cryptocurrency rally has been propelled by a risk-on sentiment and the arrival of Bitcoin ETFs on the market. The latter has opened the way for additional categories of investors to enter the market, bringing in more optimism and capital. This surge in demand could continue to bolster bitcoin prices and could fuel demand for other crypto assets. The constrained supply due to higher demand and the impending halving event could continue to support prices.

“Additionally, dwindling amounts of bitcoin on exchanges could suggest a shifting perception among investors, favoring long-term investment over short-term trading. This trend exacerbates the already strained supply, further driving up prices.

“Looking forward, a potential approval of an Ethereum ETF by the SEC could inject additional momentum into the crypto sphere, although uncertainties loom given the regulator’s reticence on the matter. An approval could also bolster other crypto assets.

“Despite regulatory challenges and market volatility, the recent surge underscores the growing acceptance of digital currencies. At the same time, the market’s performance presents enticing opportunities for investors.”

 

For any questions, comments or features, please contact us directly.

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Julie Lamb, Co-Founder at CryptoOracle

 

“The recent rise in popularity of cryptocurrencies demonstrates a growing acceptance and curiosity from investors, hinting at their adoption in the future. This surge might pave the way for advancements in technology that enhance the security, scalability and user friendliness of currencies. Cryptocurrency market unpredictability calls for a thorough investigation before diving into investments.

“It is critical to be cautious when dealing with currencies and to recognise the risks involved, regardless of the outlook. In general, this upsurge points towards a path for the future of currencies, emphasising the importance of making wise decisions while navigating this ever-changing landscape.”

 

Pablo Horcajuelo Muñoz, Director of Projects at Sale Systems

 

“The recent surge of interest and development in the realm of cryptocurrencies suggests a significant and possibly lasting shift in the global financial landscape.

“The advent of cryptocurrency-based financial products, such as the first Bitcoin ETF, signifies a growing legitimisation and acceptance of these digital currencies in traditional financial markets. This event, taking place in a financial hub as influential as Wall Street, could encourage investors worldwide to consider cryptocurrencies as a viable investment, potentially increasing their value and adoption.

“The underlying technology, blockchain, offers inherent security due to its decentralisation and encryption. However, this does not exempt cryptocurrencies from risks, including volatility and the possibility of losing value. Although legality varies between countries, the growing interest from businesses and some governments indicates a movement towards greater acceptance, though regulation remains a grey area in many jurisdictions.

“The environmental impact of cryptocurrency mining is a concern, highlighting the need for sustainable solutions in the future. Nonetheless, the potential to revolutionise payment systems, reduce transaction costs, and provide financial access to unbanked populations remains a strong argument in favour of cryptocurrencies.

“In summary, the latest wave of cryptocurrencies reflects a turning point in the perception and use of digital currencies. As the world moves towards greater digitalisation, we are likely to see an increase in cryptocurrency innovation and adoption, accompanied by necessary regulatory development to mitigate its risks.”

 

For any questions, comments or features, please contact us directly.

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