Is Crypto Dead? Separating Fact from Fiction: An Update this 2024
“Crypto is dead” was a favorite 2023 catchphrase by hobby analysts on social media and anywhere else they could grab your ear. Then 2024 came shooting in, skyrocketing Bitcoin to a five-year high that was still looking pretty by Easter. Ethereum and other currencies have experienced similar upswings. Not the actions of the deceased.
Crypto is not dead. Instead, it remains a volatile market operating in cycles. 2024 has less hype than 2021, with investors favoring longtime players like Bitcoin and Ethereum, who have rewarded those with a “buy and hold” strategy. “Meme coins” are proving less popular in 2024 but are also up.
The first quarter of 2024 demonstrated that crypto lives to keep investors on their toes. The latest spike has created new interest in digital currencies, but skepticism has remained. In our updated analysis of the crypto market in 2024, we’ll dive into the booms and busts and where we may be headed.
The Rise and Fall of Crypto: A Historical Perspective
Cryptocurrency has been floating around since 1998. But until Bitcoin came on the scene in 2008, the brainchild of the mysterious Satoshi Nakamoto, not many cared. It remained a curious sideshow, with a few other currencies popping out in 2011.
- 2011: Bitcoin is far from mainstream, but interest is growing. A few other currencies are also released.
- 2013 – 2016: Bitcoin’s first spike, crash, and currency exchange controversy when Mt. Gox was hacked in 2014.
- 2016: Ethereum gains attention with its smart contracts and other features. Rumors swirl that it will overtake Bitcoin.
- 2017: Bitcoin breaks the $10,000 mark and flirts with $20,000 in December.
- 2018: Bitcoin crashes, taking other currencies with it.
- 2020: Bitcoin begins by breaking $10,000 again.
- 2020: The pandemic hits, Bitcoin’s value plummets by around 50%.
- 2020-2021: Stuck at home, people begin researching crypto, and interest expands, including “meme coins” like Dogecoin.
- 2021: Elon goes on SNL in May and declares Dogecoin “a hustle,” plunging its value. Some feared this would spell its end. But in 2024, it is still around.
- 2022: LUNA, a stablecoin, goes into a death spiral in May. Its demise spreads nervousness across the crypto market.
- 2022: Sam Bankman Fried’s FTX exchange goes bankrupt in November, plunging crypto into “winter.”
- 2024: Spot Bitcoin ETFs are approved in January. The Bitcoin Halving is due in April 2024. Interest in Bitcoin spikes, spreading across the crypto landscape.
The Current Landscape of Cryptocurrencies
Cryptocurrency has been overall positive in the first quarter of 2024. The anticipation of the Bitcoin Halving has renewed interest in currency and other digital assets.
Halving occurs around every four years, slashing a minor’s income by half. Minors are less incentivized; fewer coins are “mined,” creating an uptick in value, although the amount varies. In 2016, it rose by 1.3%, and in 2020 it was 12%.
Other 2024 excitement comes from the premier of Spot Bitcoin ETF (exchange-traded funds) after the Securities and Exchange Commission approved it in early January.
Spot Bitcoin ETFs allow investors to get in on crypto without owning coins and dealing with digital and hardware wallets. Instead, the EFT owns the coins, and investors own shares. These differ from Bitcoin Futures ETFs, contracts that track price.
Others are also looking to get into ETFs. However, at the start of April, Ethereum’s application has yet to be approved. Meanwhile, Hong Kong is considering applications, although there are no promises, as is the London Stock Exchange.
All of this proves that cryptocurrencies are far from dead. Although, the excitement in 2024 is less flashy than in 2021. Fewer celebrities are involved, and fewer currencies are “going viral” in memes and other social media trends.
Instead, the current rise appears to have donned a jacket and tie. Major financial institutions like BlackRock are providing the ETFs. The development is interesting, given that decentralized finance (DeFi) is at cryptocurrencies’ heart.
DeFi and the Blockchain Giving Power to the People
Cryptocurrencies don’t rely on traditional financial institutions or centralized regulators to exist or operate. Instead, many function within the DeFi ecosystem, an accessible peer-to-peer space allowing users to transact and do business, such as drawing up smart contracts in the blockchain, without involving a third party.
The majority of the DeFi projects are built on Ethereum. These spaces put users in control of their wealth and business while still allowing privacy and security. It is also accessible and open to anyone with internet access who is interested in savings accounts, borrowing, lending, and trading.
2024 Cryptocurrency Key Players
Bitcoin (BTC) remains the most famous cryptocurrency in 2024. But it is far from the only one. There are over 20,000 cryptocurrencies, although less than half are believed to be active. Many are flawed, poorly designed, or lacking in purpose. However, others bring interesting features or uses to the digital landscape.
While Bitcoin has proven to be here for the long haul, it is far from perfect. All the things that make Bitcoin such a favorite for the “buy and hold” investors also make its transaction speed incredibly slow and have a significant environmental impact.
Ethereum, the protocol behind the second highest-valued cryptocurrency, Ether (ETH), is exploiting Bitcoin’s environmental weakness by moving from proof-of-work to proof-of-stake to reduce its energy consumption.
Other cryptocurrencies holding people’s attention in 2024 include:
- Avalanche (AVAX): A cryptocurrency for people who value speed and low transaction fees. Its high total value locked (TVL) also gives its users confidence in the protocol.
- Binance Coin (BNB): It’s the currency of the Binance exchange and is useful for paying fees or buying other crypto.
- Cardano (ADA): A fairly new cryptocurrency that uses proof of stake to keep its dealings energy-efficient. Its biggest peak was in 2021, but in 2024, interest is being renewed.
- Dogecoin (DOGE): The meme coin that won’t die. While not a serious investment, it is a faster alternative to Bitcoin and Ethereum, although not the fastest out there, and has less environmental impact than the big two. For many, the currency’s value isn’t the point but the joy and fun it brings to the digital landscape.
- Litecoin (LTC): The U.S. Commodity Futures Trading Commission (CFTC) recently declared Litecoin a commodity, causing a surge at the start of April. The currency is modeled after Bitcoin but has a significantly faster transaction speed.
- Ripple XRP (XRP): Its fast global transaction speed makes it the crypto competitor to the fee-heavy SWIFT system. However, it is not without its legal challenges, and it can be volatile.
- Solana (SOL): A high-speed and scalable coin, exciting for anyone who wants DeFi to become a more usable alternative to fiat centralized systems.
- Tether (USDT): A stablecoin backed by U.S. dollars, held by reserves. It’s helpful if you need a steady coin when trading or paying for a product or service.
Lastly, Polkadot is the new kid on the block to watch. The token (DOT) is mostly used for staking and governance. The exciting part is the protocol that connects different blockchains (i.e., Bitcoin and Ethereum) so they can exchange value and data without needing a third party.
Understanding Market Volatility
Cryptocurrency is a fresh and volatile market. Unlike long-honored forms of investment, it’s much more vulnerable to hype, news headlines, global events, and significant regulatory changes.
Crypto’s value is also heavily influenced by “whales,” key players that bought into the digital landscape early and in abundance. When they buy or sell, it has a significant impact on supply and demand.
The older and more established the currency, the less likely it is to spiral to nothing. Take Bitcoin. Anyone who bought before 2021 has seen an increase in value, even during the crashes and “crypto winter.” It’s the type of investment that makes those with a “buy and hold” strategy happy.
Those wanting to mitigate risk in cryptocurrency need to do their research. Rather than follow hype and trends, look into the technology and security behind the coin.
Also, look into the purpose of the currency. For example, Tether is pretty stable and safe, making it a solid choice for certain transactions but a poor long-term investment.
There are currencies with excellent transaction speed, which might be valuable if you plan to do a lot of trading or transactions. However, it might be worth sacrificing some speed for better stability and security if you’re not planning to do a lot of buying and selling.
Lastly, like any investment, never sink money you can’t lose, and consider diversifying your currencies to spread the risk.
Debunking Myths: Common Misconceptions about Crypto
Myths and misconceptions cloud the crypto landscape. We’ve rounded up a few common concerns and provided a clearer picture.
Can Cryptocurrencies Be Hacked?
Well-built cryptocurrencies like Bitcoin are nearly impossible to hack thanks to blockchain technology, which has encryption and wide distribution. Nor is it likely to be hacked during a transaction for the same reasons.
The biggest reason people are “hacked” in the crypto world is falling for a scam. Unfortunately, once it is gone, it is gone, and there is no bank to bail you out.
In addition, cryptocurrency must be kept safe. People can be careless with their passwords or seed phrases, leaving them vulnerable to hackers. In addition, wallet security must be researched and taken seriously.
Is Crypto Another Bennie Baby Trend?
The question, ‘Is crypto dead,” is rooted in famous bubbles fueled by trends, like the 17th-century Dutch tulips and the 90s beanie babies. These were due to short-term hype, the tulips rising and falling in 6 months, and the beanie babies never made it to the new millennium.
Crypto also started in the 90s but is still here. Like the stock market and housing prices, it rises and falls, and there are losers, but overall, the long-term trends show growth.
Is Crypto Unethical?
Crypto has a smokey, behind-closed-doors reputation associated with drugs and other illicit activity. But most cryptocurrency users are investors and digital currency enthusiasts using it for ligament business.
According to the 2022 Crypto Crime Report, illicit transactions only comprise 0.15% of cryptocurrency transaction volume. Most crime and money laundering are transacted in fiat currency, like U.S. dollars.
Regulatory Environment and Government Stance
Every country has its own approach to regulating cryptocurrencies. The rules vary from outright bans to essentially no regulation or somewhere in between.
Governments can’t control crypto in the same manner as they can with their own currencies. Instead, regulations are placed on exchanges and their citizens, the latter typically with tax laws.
Regulations influence the crypto market significantly if they impact a large wealth population. For example, if China granted cryptocurrencies legal status, it would more than likely cause the crypto market to dramatically increase.
On the flip side, if the U.S. or Europe tightens control too much, the value of crypto could sink.
Some regulations can be helpful. They add legitimacy to the digital landscape, increasing confidence and expanding interest.
Too much regulation stifles the market. It makes cryptocurrencies less accessible full of red tape, high fees, and high taxes.
One of the biggest debates in the U.S. was whether to classify crypto as a commodity, like gold and silver, or a security, like stocks and bonds. How a particular cryptocurrency is classified impacts taxes and what crypto exchanges must do to be in compliance.
For instance, Bitcoin is a commodity, but Bitcoin EFTs are a security.
The upside to EFT securities:
- Ease of use (no wallets or keys).
- Tax benefits.
- Regulatory oversight protections.
The downside to EFT securities:
- The user doesn’t technically own it. If the holder collapses or their vault is raided, the investor loses.
- Higher management fees and operational expenses.
- Tracking delays can impact investment value.
It is also essential to understand a country’s tax rules around crypto. Some countries, like the U.S. and Australia, have different tax brackets based on how long a coin is held. Those who buy and sell frequently pay higher taxes per transaction than those who hold for over a year.
The Role of Institutional Investors
Institutional investors are playing a major role in the crypto market. In 2022, they were believed to hold 50% of crypto securities. They generally use cryptocurrencies as a way to diversify their assets.
On the positive, they are viewed as bringing legitimacy and stability to the market due to their sophisticated understanding of markets. Their presence gives credence to the digital assets’ claim of long-term viability.
Their movement into crypto has brought a greater urgency for clarification on regulations. The clearer the regulations, the greater the institutional participation and confidence in crypto. Thus, the more they invest in crypto, the more stable the market.
At least, that’s the claim.
On the negative are increased regulations that can make cryptocurrency more exclusive and threaten privacy. In addition, intuitional participation can create bubbles and influence markets by the sheer size of their transactions.
Similarly, while institutional investor perception can drive innovation in products and services, they can also stifle it to protect their own interests or kill it with too much regulation.
The Environmental Impact of Cryptocurrencies
Cryptocurrency has come under the green glare for its energy consumption. It is an important issue, but it is not always discussed transparently. For instance, while a great deal of focus is on Bitcoin being a high-energy user, few mention that most of its consumption is carbon neutral.
Meanwhile, Ethereum is leading the way in reducing its energy consumption by shifting to proof-of-stake. Other coins and protocols have followed or are being modeled after it. These efforts are reducing the environmental impact of cryptocurrencies.
There are also green tokens that have the environment as part of their core ethos, like Green Bitcoin, Solana, Algorand, and Polygon.
It’s essential to remember that miners need clean and affordable energy to make a living. Miners have pushed for innovation in renewable energy sources in the past. April’s Bitcoin Halving will only push miners further to use more green methods to keep their computers running.
The Future of Cryptocurrencies
Cryptocurrencies are becoming faster, and platforms are expanding ways for blockchains to communicate directly and exchange data.
These allow for potentially exciting developments, such as using cryptocurrencies for more everyday transactions, especially global commerce. It will also make crypto more accessible and reduce fees, should regulations not create too many additional costs.
The more accessible cryptocurrency becomes, the more it will drive banks to lower roadblocks to moving currency, reducing time and costs. As security becomes tighter and easier to manage, confidence will rise.
Crypto also provides new ways to fundraise and finance projects outside the traditional banking and investor models. For instance, as technology expands, more products and possibilities will be available in DeFi.
Frequently Asked Questions (FAQs)
Are Cryptocurrencies a Safe Investment?
Cryptocurrencies are not risk-free investments or FDIC-insured, like your average American savings account. Users cannot cancel or reverse a transaction if they make a mistake or discover a scam. Also, those who leave the bulk of their crypto in an exchange are at the mercy of the exchange (i.e., FTX).
Can I Use Cryptocurrencies for Everyday Transactions?
Some cryptocurrencies can be used for everyday transactions, but not all businesses will accept them. It depends on where you live, shop, and do business.
How Do I Store My Cryptocurrencies Securely?
The safest storage for cryptocurrency is a hardware wallet not connected to the internet. Online wallet security varies, and hot wallets used to make transactions on an exchange should not be used for long-term storage. Security also heavily depends on how well passwords and seeds are kept secret.
What Are the Tax Implications of Owning Cryptocurrencies?
Cryptocurrency taxes depend on the country in which a user is taxed. For instance, crypto is subject to income and capital gains tax in the U.S. In addition, how long a user holds a currency before selling impacts the tax bracket.
Can Cryptocurrencies Be Regulated?
A government can regulate cryptocurrency exchanges and users, but a single government cannot control the currency. For example, governments can make rules regarding taxes, whether crypto is classified as a security, which exchanges you may use, and can regulate how an exchange operates.
What Are the Risks of Investing in Cryptocurrencies?
The biggest risks of cryptocurrencies are their volatility, still evolving regulatory climate, and users not understanding how to properly secure their wallets. Research is the best defense against all these concerns.
What Is the Long-Term Potential of Cryptocurrencies?
Crypto has the potential for much bigger long-term returns than traditional investments. Innovation also creates faster transaction speeds, opening up more possibilities for cryptocurrencies to become the preferred global currencies.
Conclusion
Crypto is far from dead. It has a promising future as an investment and for global commerce, with possibilities expanding as technology develops. It’s an exciting financial landscape with lots of potential. But like any investment, there are risks. It’s essential to keep up-to-date with the latest regulations and what is happening in the market.
