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May 2024 Crypto Market Forecast

May 2024 Crypto Market Forecast

Since investors are not receiving the desired bounce from the bitcoin halving, Bitcoin has retreated from all-time highs. At the same time, other prominent crypto market have endured difficulties. 

 After the first spot Bitcoin exchange-traded funds were introduced in January, investors have recently poured money into Bitcoin and other cryptocurrencies. However, there has been less optimism regarding the impending release of the first Ethereum spot ETFs in recent weeks. 

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 Additionally, as G.D.P. growth declined drastically in the first quarter and inflation remained stubbornly sticky, cryptocurrency investors are increasingly anxious about a possible slowdown in the U.S.U.S. economy. 

April Crypto Market Performance

 Inflows to new spot bitcoin ETFs pushed bitcoin prices to new all-time highs above $73,000 in March. The price of bitcoin did, however, decline from its April peak. They finished the month slightly higher than $60,000. 

 Similar to how Ethereum prices ended April just below $3,000, they had risen as high as $4,092 in March. Investors still hope the U.S.U.S. Securities and Exchange Commission will soon approve spot Ethereum and bitcoin ETFs.  

Even if the price of Bitcoin fell by over 8% in April, it has increased by almost 50% so far this year. Although Ethereum prices fell by about 8% throughout the month, they have increased by roughly 40% in 2024.  

The largest spot bitcoin ETF by assets under management, the Grayscale Bitcoin Trust ETF (G.B.T.C.), fell 11% in April. That was, however, not due to nervousness over macroeconomic trends or strategic cryptocurrency challenges but rather to investor concerns regarding the annual cost of that specific fund. 

Toncoin (TONNE), one of the top 10 cryptocurrencies by crypto market capitalization, was the best performer in April with a 5% gain. Avalanche (A.V.A.X.) was the worst performer, with a 37% decline. 

Complete Bitcoin Halving 

The Bitcoin network automatically experiences a halving whenever 210,000 new blocks of transactions are added to the blockchain. During this time, bitcoin miners’ reward for validating a block of transactions is halved. 

Bitcoin halvings lower the amount of newly produced BTC. In the past, the price of bitcoin peaked about a year before a halved and has been rising for about a year after the halves are finished. 

Since the crypto market debut in 2009, the Bitcoin network has conducted four halvings, the most recent of which occurred at block 840,000 in the blockchain. The halving lowered the incentive Bitcoin miners earn for confirming a single block of transactions from 6.25 BTC to 3.125 BTC. 

Launch of Bitcoin Runes 

The newest Bitcoin halving also coincided with the debut of Bitcoin Runes. This new technology will allow crypto aficionados to create and trade meme coins on the Bitcoin network. 

Casey Rodarmor, who also created and launched Bitcoin Ordinals in 2023, is the developer of Bitcoin Runes. Bitcoin Ordinals introduced non-fungible tokens, or NFTs, to the Bitcoin network for the first time. NFT trading has become extremely popular on Ethereum and other blockchains in the last several years. 

Unlike NFTs, which are all unique, Bitcoin Runes allow for the creation of fungible, identical, interchangeable tokens, much like different $1 bills. 

Since its launch, the Bitcoin Runes crypto market has shown tremendous price volatility and very little liquidity. More than two-thirds of Runes were in the red as of the end of April, and the protocol has come under fire from detractors for its part in driving up Bitcoin transaction costs. 

Spot Ethereum ETFs? 

VanEck, A.R.K. Investment Management, and seven other companies have submitted applications to introduce spot Ethereum ETFs in the United States to the S.E.C. 

The VanEck application’s first spot Ethereum ETF decision deadline is May 23, and the deadline for A.R.K. application decisions is May 24. Unfortunately, applicants have stated that recent encounters with the S.E.C. have disheartened them. Sources close to the case say the S.E.C. will likely reject the initial wave of spot Ethereum ETF filings. 

Ahead: More Regulatory Difficulties 

In April, authorities carried out their crackdown on the cryptocurrency market: 

On April 24, the U.S.U.S. Department of Justice filed charges against the co-founders of Samourai Wallet tied to their alleged role in facilitating more than $100 million in money laundering. 

In response to the S.E.C.’s Wells notice in early April, which alerted Consensys Software to an impending enforcement action, Consensys Software filed a lawsuit against the agency, contesting the regulator’s jurisdiction over Ethereum. 

On April 10, cryptocurrency exchange Uniswap Labs also said that the S.E.C. had sent it a Wells notice, alerting the exchange to the possibility that the agency may suggest legal action against it. 

James Davies, co-founder and chief product officer at Crypto Valley Exchange, says the S.E.C.’s actions against Samourai, Consensys, and Uniswap have been far more impactful than the bitcoin halving in recent weeks. 

The introduction of Runes was clearly a buy the news, sell the event scenario, and the halving of Bitcoin was largely priced in. Still, according to Davies, the U.S.U.S. regulator’s actions weren’t less anticipated. They will have far more significant effects on the industry.  

Ripple’s apparent success in opposing the S.E.C. in court has inspired other projects to take legal action. Davies predicts that countersuits will pave the way for the legal disputes that will ultimately shape the industry. 

Other Crypto Headlines 

On April 5, a New York jury sided with the S.E.C. in its action against Terraform Labs and the company’s former C.E.O., Do Kwon. 

The jury determined that the South Korean businessman and his organization had deceived investors regarding the soundness of the stablecoin TerraUSD before its collapse in 2022, which resulted in the loss of $40 billion in value. 

The Grayscale Bitcoin Trust ETF continues to endure large withdrawals as investors dump G.B.T.C. shares in favor of spot Bitcoin ETFs with a more investor-friendly fee structure. 

As of mid-April, investors have withdrawn more than $16 billion from the G.B.T.C. fund since it was converted to an ETF on January 11. During that same period, the ten competing spot bitcoin funds have experienced more than $29 billion in net inflows. 

Future Crypto Catalysts 

Due to the ongoing regulatory crackdown on crypto market, Anthony Rousseau, head of brokerage solutions at TradeStation Group, says cryptocurrency investors should anticipate increased volatility in May. 

According to Rousseau, “I think the D.O.J., S.E.C., and this administration continue to attack the industry and will take all necessary steps to slow down adoption.” 

 However, Rousseau says the crypto train has seemingly already left the station, making it difficult for regulators to slow it down. 

In addition, the next several weeks may be critical for the U.S.U.S. economy. Investors tend to sell stocks, cryptos, and other risk assets when they anticipate economic weakness ahead. 

According to Labour Department data released in April, the consumer price index, or C.P.I., increased 3.5% yearly in March. This increase was above the 3.2% year-over-year gain in February and beyond the 3.4% growth economists expected. 

A few days later, the Commerce Department revealed that the first quarter’s U.S.U.S. G.D.P. growth was only 1.6% yearly, significantly less than the 2.4% growth economists had predicted and down from the fourth quarter’s 3.6% growth. 

John Glover, chief investment officer of Ledn, said crypto investors will be paying close attention to U.S.U.S. economic data and monetary policy. 

 “The key to bitcoin price performance (a strong proxy for all of crypto) in May will be data releases out of the U.S.U.S., with all eyes on inflation data,” Glover says. 

“Additional focus will be on the S.E.C. and whether [S.E.C. Chair Gary] Gensler succumbs to pressure to allow for a spot ETH ETF in the U.S. U.S.”

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