Following a spectacular surge that saw cryptocurrencies reach new highs, the past week or so has seen Bitcoin suffer decline of 11%. This change in the market has left investors wondering whether it represents a mere temporary dip or a wider trend. Nonetheless, experts remain cautiously optimistic about the continued growth of crypto.
During the Blockchain Life 2024 conference, experts from crypto whales discussed the current characteristics of the market, their predictions for the next few months and the importance of the role of the founder in attracting funding for a project.
Bull run and Bitcoin halving
The first four months of 2024 were very significant for the cryptocurrencies market. This period saw the SEC approval of Bitcoin ETFs, which led to major corporations integrating the cryptocurrency into their balance sheets, propelling a bullish background for crypto. Moreover, with Bitcoin halving approaching quick, some wonder whether the crypto market has reached its peak.
Speaking at Blockchain Life 2024, Bhavik Patel, CIO of Arrington Capital stressed that there is still room for growth in the crypto industry. “We’re definitely not at the start, and I think everyone in this room would not want us to be at the top (…) I think we’re somewhere in between.”
Despite admitting there has been “a small pullback over the last few days”, Patel described the volatility as a result of “leverage in the system”, stressing that pullbacks are a normal characteristic of the market: “It’s just default”.
“I think we are in a bull run,” added Danilo S. Carlucci, Founder and CEO of Morningstar Ventures. For Carlucci, the current situation is not dissimilar to that of 2020, just before the last Bitcoin halving.
“The market was pretty similar to where we are right now, at this stage,” he said. “There was early anticipation and growth about six months before the actual happening, then after the halvening itself, nothing really happened. And then about six months to four to six months after the actual event is when the next wave came.
“I think we will, we will dip or we will stay where we are right now. And then hopefully, things will be better in a few months.”
There are discrepancies over the impact that Bitcoin halving events have on the market. According to Bitfinex, the first halving in 2012 saw Bitcoin’s price increase from about $12 to nearly $1,150 within a year, while the 2016 halving was followed by a bull run that peaked in December 2017, pushing Bitcoin’s price to then all-time highs.
Andrei Grachev, Founder of DWF Labs, was more cautious. He stressed that, although Bitcoin and other crypto assets have hit an all-time-high, there is still a long way to walk before reaching a widespread audience. “The number of Google requests about crypto or Bitcoin hasn’t hit an all-time high yet.” He also stressed the likelihood of a correction coming soon.
“I think we will see at least one more wave of this market,” Grachev said. “Then, who knows.”
Interest rates
In the midst of heightened expectation for the Bitcoin halving, investors in the market are also keeping an eye on changes in US interest rates, which could significantly impact the price of cryptocurrencies.
Over the last 24 hours, Bitcoin price dropped to $62,900 as US Federal Reserve Chair Jerome Powell signalled extended high-interest rates, dampening hopes for near-term cuts. The agency has held its target range between 5.25% and 5.50% since the summer of 2023.
“I think we will see at least one more wave of this market. Then, who knows.”
Andrei Grachev
Although there was an expectation on the investor’s part that rate cuts could come as soon as May 2024, Powell stressed that recent data “have clearly not given us greater confidence” and said it is likely to take longer than expected to achieve that confidence.
“We had a year last year where we’ve seen incredible amounts of rate increases, more than probably most investors have seen this decade,” Patel said. “Before, interest almost became like a rounding error on what you received in your savings accounts.”
The experts nonetheless refused to detail the exact impact that rates would have on the price of crypto, highlighting instead the need to be “cognisant” of the global financial picture.
Founders-first approach
When it comes to selecting projects to fund, the speakers agreed on the importance of a founder-first approach, stressing the need for a leader with a vision and the ability to motivate a team and create a community that would support their enterprises.
“We look for exceptional founders, who are deeply passionate about what they’re building,” Patel said. “They want to build a team around them, and they’re working on ideas which can have a large market and add long term value to the ecosystem. These are the sorts of things we care about. In addition to that, I’d say it’s, it’s vital that they build a community around them, especially in this space.”
Grachev agreed, highlighting the importance of selecting leaders that inspire trust: “Behind every idea behind every technology, we should have like a team that could execute it and it should be trusted.”
To gain investor trust, founders were advised to understand the gaps in the market, as well as having a solid financial plan in mind, with room for flexibility.
“I think there is no secret sauce, but it’s always very important to be super careful to have adaptability in your metrics,” Carlucci said.
The future is gaming
The future of blockchain technologies and cryptocurrencies is expected to take many forms. Although the tokenisation of real world assets is one such use case that is set to create a lot of value for the sector, the speakers at Blockchain Life 2024 highlighted the importance of the video games market in making crypto more accessible and understandable to a wider audience.
“What I’m most excited about is is seeing my son in few years using the blockchain without knowing that he’s using the blockchain, and I hope gaming will be that solution,” Carlucci reflected.
“I agree about gaming,” Grachev said. “This is the most understandable for people. You need to explain crypto terms, but you don’t need to explain how games work. It’s clear for everyone.”
The upcoming months will bring a lot of uncertainty in the wider geopolitical and financial sphere, as well as to the cryptocurrency market. While some investors are cautious about the short-term, experts agreed that crypto has far from hit its peak and that the asset class still has higher highs ahead.
