Unlike crypto winters, when long-term negative sentiments trigger falling crypto prices and low activity, investors eagerly await crypto summers as prices rise again and everything’s back on track. Everyone remembers the crypto summers from 2017 and 2021, when the overall market capitalization increased considerably, reaching even $2 trillion in April 2021. Since the crypto summer usually takes only a few months, investors must rapidly change their approach to profit from it.
Getting through the crypto summer poses various challenges despite being a productive period. Investors must diversify their portfolios and add more than just Bitcoin, so checking out the price before the crypto summer emerges is essential, according to Binance. At the same time, some must withstand FOMO and choose to automate their investments for consistency rather than panic buying.
Regardless, the crypto summer 2024 will lay the groundwork for impressive improvements and technologies, so let’s find out what investors should anticipate.
The next alt season is here
Alt season happens when Bitcoin is shortly overthrown by altcoins, meaning their value surpasses it. The positive increase of altcoins, like Ethereum, XRP, and Cardano, pushes investors to diversify their portfolios as these assets have various use cases and can provide high potential rewards. That’s why the alt season is a critical period.
Investors should expect a sudden drop in the BTC price before the alt season starts to kick off, so we say it’s a bit misleading. Some experts stated that the 2024 altcoin season will be rushed, so users can take advantage of it only when prices reach high values. Hence, some altcoins are set to explode, so investors should minimize their input and avoid risking through a stop-loss strategy where they automatically sell securities when reaching specific prices.
Sustainability on the rise
The sustainability problem in the crypto industry raised uncertainties about its development and contribution to a better future, especially since mining is detrimental to the environment. Although some altcoins made considerable efforts to minimize their impact on nature, such as switching from the PoW consensus mechanism to PoS, the industry needs to improve its net-zero emissions.
It seems like 2024 will be the year of sustainability, and Ethereum will supply this movement due to its Layer 2 solutions. Ethereum will become more scalable and secure, and fees will be affordable for all users. These aspects will put the base for accessing institutional capital flows, providing investors better security against rug-pulls and frauds. The movement will automatically change the market, with developers discovering better mining methods, validating and contributing to the ecosystem.
CBDCs will approach stablecoins
Stablecoins are among the best cryptocurrencies for diversifying one’s portfolio because their value is pegged to another financial instrument. This lowers their volatility levels, providing an alternative to popular cryptocurrencies like Bitcoin. Some stablecoins are tied to currencies like the US dollar, which is why the Central Bank Digital Currencies (CBDCs) might start approaching regulated stablecoins.
CBDCs are issued by a country’s central banking system, and the coins they provide are similar to the country’s fiat currency, so they’re safer to adopt. These banking systems are the future of finance as many countries started to implement them as a way to digitalize the world. At the same time, CBDCs might offer more privacy, accessibility, and security to regular consumers while decreasing maintenance costs for businesses.
Growing applications of AI and blockchain
Blockchain and artificial intelligence might cross the same path together as they’re used to leverage dataset integrity. As blockchain can better protect datasets, AI can organize them and benefit from its algorithms for enhanced transparency. Since 2023 was the year of AI, we expect that the next step is blockchain blending with AI beyond the crypto industry.
When it comes to cryptocurrencies, blockchain and artificial intelligence can protect consumers’ data so they won’t be exposed to fraud anymore since AI systems can detect suspicious activity within one’s account interactions. Moreover, AI cryptocurrencies are rising in popularity, so we should generally expect increasing AI involvement in all industries.
Decentralized Finance to expand
DeFi was seen rising at the end of 2023, with platforms like Uniswap and Compound contributing to real-world asset tokenization and investment tools. Blockchains like Ethereum and Solana consistently support the development of these DeFi investments, which is why 2024 might be the year of further explorations.
DeFi can change the financial system by providing more accessibility, high-interest rates, security, and autonomy to current institutions in order to escape the burden of centralized financial institutions. But for DeFi to develop, a few problems should be addressed, such as enforcing regulations and investigating cybercrimes across protocols and ecosystems.
How will the 2024 Bitcoin halving influence the market?
2024 is an essential year for crypto since the next Bitcoin halving will occur, meaning the mining reward will decrease by half, leaving miners in an impasse. That’s because they’ll have to increase their computational power and general input in order to yield the same results as previous years, while the reward will be less significant. This movement might trigger a crisis in the crypto sector, but another issue will hit it.
As the halving approaches, and even during it, crypto prices will most likely boom, contributing to the crypto summer event as the halving will likely occur in April. Hence, investors must prepare for a wave of volatility after the halving occurs by strengthening their portfolios and ensuring they’re not exposed to considerable risk in the short term. After the halving, prices might return to their regular values, but in some cases, they can go lower than expected when all the fuss will end.
Bottom line
The crypto market continues evolving in 2024 as experts predict some elements will develop significantly. The alt season might happen at the beginning of the year, while a more sustainable market will slowly but steadily be built around mining and other polluting activities. CBDCs will approach stablecoins, and DeFi will provide many products and services. Finally, the Bitcoin halving might have a more significant impact than we’re prepared for, but the event is closer than we think.
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