What To Watch Out For In Bitcoin and Crypto Markets in the Second Half Of 2024

Bitcoin has climbed this year, rising more than 30%, with demand for ETFs that hold the leading cryptocurrency helping its price upward. But bitcoin prices have recently cooled, pulling back from record highs set earlier this year. 

That trend continued Friday, with bitcoin slipping below $57,000 in late-afternoon trading after rising above $73,000 in March. So what’s the outlook for the rest of 2024? Bullish investors say further demand for crypto-focused exchange-traded funds could push prices higher. But other issues loom on the horizon.

Demand for Bitcoin, Ether ETFs Could Lift Crypto

Demand related to the spot bitcoin (BTC) exchange-traded funds that began trading in January has supported the cryptocurrency this year. Bulls say that effect hasn’t played out yet. 

The new ETFs have recorded net inflows of more than $14.4 billion, according to Farside Investors. Most flows into bitcoin ETFs, which hold the currency, currently come from self-directed investors, and market watchers believe further demand could arrive as financial advisors become less wary of recommending crypto products to clients, boosting bitcoin itself.

“We also don’t see many institutions like pensions or endowments involved with the ETFs yet,” said Bloomberg Intelligence analyst James Seyffart. “To me that means there are definitely areas of potential growth in demand.”

Investors broadly expect ETFs based on ether (ETH) to come to market this year: The Securities and Exchange Commission is expected to approve individual ETF applications by the end of the summer. That could boost demand for cryptocurrencies. 

Bitwise CIO Matt Hougan estimates inflows of $15 billion into ether ETFs within their first 18 months. Seyffart, meanwhile, expects them to capture 20% to 25% of what the bitcoin funds attracted during their first months. 

“We do not believe Ethereum ETFs will create as big of a splash as the bitcoin ETFs, which broke many different records with regard to their flows, assets, and trading volumes,” Seyffart told Investopedia.

Growing demand for the ETFs and the underlying bitcoin could mean higher prices, especially as the supply for the cryptocurrency approaches its cap of 21 million.

The Election – and Other Issues to Watch

Other topics to watch in crypto this year include:

The presidential election. Donald Trump has come out as more supportive of cryptocurrency than he was during his presidential administration. President Joe Biden’s administration has been seen as supporting stricter regulation, though some industry watchers interpreted a recent decision to not file charges related to Ethereum 2.0 as a sign of an evolving outlook. 

“I would put the odds of ‘clarity’ before the election at 0%, and I think if there is a legislative framework, it would come next year at the earliest,” said Delphi Ventures General Counsel Sarah Brennan. 

The after-effects of the bitcoin halving: Bitcoin halvings—in which the amount of new bitcoin generated roughly every 10 minutes is cut in half—have historically had a positive impact on its price, according to analytics firm CCData, for periods running from about 370 days to almost 550.

The last halving took place about six months ago, but it differed from prior instances because bitcoin had rallied so much ahead of it. Analysts at Deutsche Bank and JPMorgan said that much of the expected price increase was already baked in ahead of the latest halving.

While recent volatility may support that theory, bitcoin bulls think that the downtrend is temporary.

“It’s normal for a price dip like this to happen after a halving—halvings are incredibly bullish, but bull markets don’t start until typically several months later—for fundamental reasons,” Caitlin Long, Founder and CEO of CustodiaBank, said in an X post late June.

Mt. Gox distributions: Failed bitcoin exchange Mt. Gox this week began distributing billions of dollars in bitcoin to former customers this month. The ultimate effect of that increased supply, which began to hit markets on Friday, is uncertain, with some seeing it as bearish and others saying the issue is overblown.