The introduction of Bitcoin ETFs made digital assets more accessible to a wide range of investors, from retail investors to large institutional funds.
The cryptocurrency industry in 2024 witnessed growth, marked by record-breaking highs, an influx of institutional participation, and significant strides in regulation.
As digital assets found their place in traditional investment portfolios, the market was reshaped by key developments in exchange-traded funds (ETFs), Bitcoin’s performance, and a global regulatory shift.
Institutional adoption soars with ETFs and digital assets
Luno’s SA Country Manager Christo de Wit says 2024 has been dubbed a landmark year for the institutional adoption of cryptocurrency.
Major financial institutions, including JPMorgan Chase, Goldman Sachs, and others, have ramped up their crypto-related initiatives, signalling a shift in the traditional finance sector.
“Once wary of the volatile digital asset space, traditional asset managers have now integrated digital assets into mainstream financial portfolios, cementing their place as an integral part of the broader investment ecosystem.”
ALSO READ: Bitcoin hits all-time high, taking altcoins along for the ride
Bitcoin’s breakthrough
He adds that one of the most pivotal events of the year was the approval of Bitcoin exchange-traded funds (ETFs) in January.
“This breakthrough allowed funds to diversify their portfolios by including cryptocurrency assets, a move previously restricted due to the lack of investment products in the US.”
The approval of multiple Bitcoin ETFs by the US Securities and Exchange Commission (SEC) marked a new chapter for digital assets, and by the end of 2024, Bitcoin ETFs amassed a combined total of $113 billion in assets.
“The introduction of Bitcoin ETFs made digital assets more accessible to a wide range of investors, from retail investors to large institutional funds. This move was hailed as a game-changer, providing greater legitimacy and visibility to the cryptocurrency space.”
Bitcoin defies tradition with halving and record highs
De Wit says traditionally, Bitcoin’s halving events, which reduce the mining reward and decrease the supply of new coins, have led to price surges, breaking previous all-time highs. However, 2024 saw Bitcoin diverge from this pattern.
Despite the halving event occurring in April, Bitcoin surpassed its previous all-time high in March, fuelled by the excitement surrounding ETF approvals.
For much of 2024, Bitcoin’s price showed a relatively flat performance. Yet, following a period of consolidation, Bitcoin experienced a dramatic breakout in November, reaching new heights and again confirming its resilience and appeal to both retail and institutional investors.
“The asset’s price in some regions surpassed R1 million, underscoring its growing prominence as a store of value and speculative investment.”
ALSO READ: Bitcoin trades at nearly R2m thanks to Donald Trump
Regulation is a key driver of legitimacy
“As the cryptocurrency industry continues to mature, global regulatory bodies have made significant progress in establishing frameworks that foster the responsible growth of the sector,” he adds.
In 2024, the regulatory environment became more favourable for crypto businesses, with clear guidelines emerging in several countries.
The Trump effect
He adds that 2024 also saw the political landscape impact the cryptocurrency market, particularly with the rise of President-elect Donald Trump.
His campaign made crypto a central element, with promises to create a “strategic Bitcoin reserve” and transform the United States into the “crypto capital of the planet.”
“Following his election, Trump took significant steps to fulfil these pledges by nominating pro-crypto figures to key federal positions.”
Inflation, interest rates, and crypto performance
He says in addition to institutional adoption, the macroeconomic landscape in 2024 contributed to the rise of digital assets.
“The US Federal Reserve, after months of aggressive interest rate hikes aimed at curbing inflation, began to soften its stance in September, reducing rates by 0.5%. A further 0.25% cut followed in November, leading many investors to believe that low interest rates would persist into 2025.”
Historically, such monetary easing has provided a boost to riskier assets, including stocks and cryptocurrencies, which have become more attractive in a low-rate environment.
With inflationary pressures showing signs of subsiding, the crypto market, including Bitcoin and altcoins, was well-positioned to benefit from this favourable economic climate.
NOW READ: FSCA greets crypto boom with batch of new licences
