Blockchain
May 2024 Cryptocurrency Market Predictions – Forbes Advisor
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Bitcoin has retreated from all-time highs and other major cryptocurrencies have struggled as investors aren’t getting the bitcoin halving boost they want.
Investors have flocked to bitcoin and other cryptocurrencies in recent months after the first bitcoin exchange-traded funds launched in January. However, optimism surrounding the imminent launch of the first Ethereum spot ETFs has faded in recent weeks.
Furthermore, cryptocurrency investors are increasingly concerned about a potential downturn in the US economy as inflation remains stubbornly sticky while GDP growth fell sharply in the first quarter.
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Cryptocurrency market performance in April
Inflows towards a new spot Bitcoin ETFs pushed bitcoin prices to new all-time highs above $73,000 in March. However, bitcoin prices have fallen from their April highs. They finished the month slightly above $60,000.
Likewise, after rising as high as $4,092 in March, Ethereum prices ended April just below $3,000, as investors continue to hope that the approval of spot Bitcoin ETFs will soon open the door to the approval of Spot ETF on Ethereum by the United States. Securities and Exchange Commission.
Although bitcoin prices fell more than 8% in April, they are still up about 50% year to date. Ethereum prices also fell more than 8% in the month, but are up about 40% so far in 2024.
The largest spot bitcoin ETF by assets under management, the Grayscale Bitcoin Trust ETF (GBTC), fell 11% in April. However, this was caused by investor concerns about that particular fund’s annual cost, not jitters over cryptocurrency-related strategic issues or macroeconomic trends.
Among the 10 largest cryptocurrencies by market capitalization, Toncoin (TON) was the best performer in April with a gain of 5%. Avalanche (AVAX) was the worst performer, down 37%.
Bitcoin halving completed
The bitcoin network has completed its last halving event on April 19th. Every time another 210,000 blocks of transactions are added to the bitcoin blockchain, the network automatically undergoes a halving, during which the reward that bitcoin miners receive for validating a block of transactions is halved.
Bitcoin halvings reduce the supply of new BTC created. Historically, bitcoin prices have bottomed out about a year before a halving occurs and continue to rise for about a year after the halving is completed.
The latest halving at block 840,000 in the bitcoin blockchain was the fourth halving completed by the bitcoin network since the cryptocurrency launched in 2009. The halving reduced the number of rewards bitcoin miners receive for verifying a single block of transactions from 6.25 BTC to 3.125 BTC.
Launch of Bitcoin runes
The latest bitcoin halving also coincided with the launch of Bitcoin Runes, a new protocol that will allow cryptocurrency enthusiasts to create and trade meme coins on the bitcoin blockchain. Meme coins are a subset of cryptocurrencies typically created as satire and intended as a tribute to internet culture.
Bitcoin Runes was developed by Casey Rodarmor, who previously created and launched Bitcoin Ordinals in 2023. Bitcoin Ordinals has actually brought non-fungible tokens, or NFT, to the bitcoin network for the first time. The popularity of NFT trading on the Ethereum network and other blockchains has exploded in recent years.
Unlike NFTs, which are all unique, Bitcoin Runes allows for the creation of identical and interchangeable fungible tokens, just like different $1 bills.
The Bitcoin Runes market has very low liquidity and has demonstrated extreme price volatility following its launch. As of late April, more than two-thirds of Runes were in the red, and critics have blasted the protocol for its role in raising fees on bitcoin transactions.
Spot ETF on Ethereum?
VanEck, ARK Investment Management and seven other companies have filed applications with the SEC to launch Ethereum spot ETFs in the United States
The first deadline to decide the spot Ethereum ETF is May 23 for the VanEck application. It is expected to be followed by the ARK application decision deadline on May 24. Unfortunately, applicants have reported that recent meetings with the SEC have been disheartening. Sources familiar with the matter suggest that the SEC will likely reject the first wave of applications for Ethereum spot ETFs.
The SEC approved the first batch of Ethereum futures ETFs in October 2023, leaving investors hoping that a spot Ethereum ETF could arrive soon. Ethereum Futures ETFs Hold Up futures contractswhile an Ethereum spot ETF would directly hold the ETH cryptocurrency.
The SEC may want to observe the performance of Ethereum futures ETFs and bitcoin spot ETFs for an extended period before giving the green light to Ethereum spot ETFs.
More regulatory headaches ahead
Meanwhile, regulators continued their crackdown on the cryptocurrency market in April:
- On April 24, the U.S. Department of Justice filed charges against the cofounders of Samourai Wallet related to their alleged role in facilitating more than $100 million in money laundering.
- After the SEC sent Consensys Software a notice to Wells in early April warning the company of impending enforcement action, Consensys filed a lawsuit against the SEC in response, challenging the regulator’s authority over Ethereum.
- On April 10, cryptocurrency exchange Uniswap Labs also revealed that it had received a Wells notice from the SEC, informing the exchange that the regulator intends to recommend legal action against it.
James Davies, co-founder and chief product officer of Crypto Valley Exchange, says the SEC’s actions against Samourai, Consensys and Uniswap have had a much bigger impact in recent weeks than the Bitcoin halving.
“The bitcoin halving was widely expected, and people expected the launch of Runes (the latter of which was clearly a buy the news, sell the event situation), but these moves by the US regulator were not just as telegraphed and will have much broader impacts on the industry,” says Davies.
However, Davies also says that Ripple and other crypto projects and platforms targeted by regulators will continue to fight back in court.
“Importantly, Ripple’s apparent success in fighting the SEC in court has encouraged other projects to do the same, and we would expect the countersuits to set the stage for court battles that will define the industry in the future,” says Davies .
More cryptocurrency headlines
On April 5, a New York jury sided with the SEC in its lawsuit against Terraform Labs and the company’s former CEO Do Kwon.
The jury ruled that the South Korean entrepreneur and his company defrauded investors by misleading them about the stability of the TerraUSD stablecoin before its collapse in 2022, which wiped out $40 billion in value.
The Grayscale Bitcoin Trust ETF continues to see heavy outflows as investors abandon GBTC stocks in favor of spot bitcoin ETFs with a more investor-friendly fee structure.
As of mid-April, investors had taken more than $16 billion out of the GBTC fund since it converted to an ETF on Jan. 11. During the same period, the 10 competing bitcoin spot funds recorded more than $29 billion in net inflows.
Crypto catalysts ahead
Anthony Rousseau, head of brokerage solutions at TradeStation Group, says cryptocurrency investors can expect more volatility in May tied to the ongoing regulatory crackdown on cryptocurrencies.
“I believe the Department of Justice, the SEC and this administration continue to attack the industry and will take every measure possible to slow adoption,” Rousseau says.
However, Rousseau says the cryptocurrency train appears to have already left the station and it will be difficult for regulators to slow it down.
“The pace at which this industry is being attacked has not stopped and adoption continues without regard [for] these events, which is surprising.”
Furthermore, the next few weeks could represent a critical phase for the US economy. Investors tend to sell stocks, cryptocurrencies and other risky assets when they anticipate future economic weakness.
In April, the Department of Labor reported the incident Consumer price index, or CPI, rose 3.5% year over year in March. That’s up from the 3.2% year-over-year growth recorded in February and higher than the 3.4% growth economists had expected.
A few days later, the Commerce Department reported that U.S. GDP grew just 1.6% year over year in the first quarter, down from 3.6% growth in the fourth quarter and well below growth of 2.4% expected by economists.
John Glover, chief investment officer at Ledn, says cryptocurrency investors will pay close attention to U.S. economic data and monetary policy.
“The key to bitcoin price action (a strong indicator for all cryptocurrencies) in May will be the release of data from the US, with all eyes on the inflation data,” says Glover.
“Further focus will be placed on the SEC and if [SEC Chair Gary] Gensler Gives In to Pressure to Allow Spot ETH ETF in US”