Crypto Market Update: Q1 2024 in Review

March: Bitcoin hits all-time high, then pulls back

March was a bustling time for the crypto market, with spot Bitcoin ETF trading volumes surging to US$111 million during the period, a nearly threefold increase compared to February’s US$42.2 billion total.

The Bitcoin price came into March with upward momentum and broke through US$68,000 on March 4, bringing its total market cap to US$1.3 trillion, close to silver’s US$1.38 trillion. After a brief dip, Bitcoin reached a new all-time high of US$73,865 on March 13. It remained volatile throughout the month, falling in the days after that high as well as on March 19, but largely fluctuating within a broad range of US$60,000 to US$70,000.

Analysts had mixed opinions on the activity, with JPMorgan (NYSE:JPM) cautioning that Bitcoin could drop below US$42,000, and Bitwise Chief Investment Officer Matt Hougan expressing optimism about its trajectory.

BlackRock opened a new filing with the SEC to purchase more Bitcoin ETFs for its Strategic Income Opportunities Fund (MUTF:BSIIX) on March 4 as total daily sales of Bitcoin ETFs reached US$5.4 billion.

Focused on attracting investors, VanEck announced it was waiving fees for its spot Bitcoin ETF until March 31, 2025, while Grayscale filed for a spinoff of its successful Grayscale Bitcoin Trust (ARCA:GBTC) in order to offer lower fees. Grayscale also introduced a crypto staking fund, the Grayscale Dynamic Income Fund, comprising a digital asset collection.

MicroStrategy (NASDAQ:MSTR), whose co-founder Michael Saylor is a strong Bitcoin advocate, expanded its holdings of the crypto coin significantly during the month when it acquired 12,000 Bitcoin for US$822 million on March 10 and 9,245 Bitcoin for US$623 million on March 19, bringing its total holdings to 214,246 Bitcoin — over 1 percent of the maximum supply of 21 million. The company paid for the purchases with multiple convertible debt offerings.

Meanwhile, Ethereum rolled out the Dencun upgrade, which led to an uptick in Layer 2 adoption and substantially reduced transaction fees for Layer 2 network users. Ether’s price climbed in the weeks leading up to the upgrade and hit a two year high of US$4,064 on March 13 before pulling back to the US$3,500 range for the remainder of the quarter.

On March 20, BlackRock launched the world’s first tokenized fund, BUIDL, on the Ethereum blockchain; it attracted over US$240 million in inflows within a week. However, it wasn’t all good news for Ethereum. Regulatory hurdles persisted as the SEC delayed a decision on spot Ethereum ETFs for the second time at the beginning of the month.

March also saw heightened interest in meme coins like Solana’s native token SOL, which surpassed US$160 in valuation on March 13, its highest price point since January 2022.

“Initially, I held a strong skepticism towards meme coins, questioning why individuals would invest in projects lacking real-world utility and use cases,” Greco said. “However, as I delved deeper into the space and observed the market cycles, I came to recognize meme coins as a significant representation of the digital assets' internet community. I believe meme coins will continue to be an integral part of this sector for the foreseeable future.”

What factors will move the crypto market in 2024?

As volatility in the crypto sector continues into the second quarter of the year, the experts INN spoke to weighed in on several trends they expect to affect the sector in the next quarter and beyond.

Greco pointed to increasing regulatory oversight. “The SEC has intensified its scrutiny of digital assets service providers in recent years, culminating in the recent approval of BTC spot ETFs. Additionally, in Europe, the Markets in Crypto-Assets Regulation will soon come into effect, while jurisdictions across Asia and other continents are also working to establish clearer and more precise regulatory frameworks for both service providers and investors," he said.

In his view, this shift will transform the structure of the market, leading to more transparency. "Naturally, this will also lead to changes in the composition of investor cohorts compared to those seen in the past," noted Greco.

To that point, in the US, the SEC, the Commodity Futures Trading Commission and the Department of the Treasury have requested that Congress provide funding in the 2025 fiscal year to hire 33 more people to oversee “new and emerging issues,” many of which center on the cryptocurrency sector.

The Bitcoin halving, which is anticipated to take place on April 19, will undoubtedly affect market dynamics. Historical trends indicate that the nine to 12 months following halving events are bullish for the price. However, even during uptrends, Bitcoin has experienced dips of 25 to 30 percent, making it challenging to predict short-term price action.

The approval or rejection of spot Ethereum ETFs will also be a catalyst moving forward.

“I think market reaction would be overall net positive if a spot Ether ETF were to be approved in the US,” Gareston speculated to INN. “The ETF vehicle itself supports the asset, and there appears to be enough investor demand to continue to drive the initiative from a commercial perspective. Canada, for example, has had spot Ether ETFs for the past three years or so, where custodied Ether can now be ‘staked’ to generate an additional, novel revenue stream for fund investors in accordance with applicable Canadian securities laws. I personally am bullish on the likelihood of SEC approval of spot Ether ETFs, but I think the timeline will be beyond 2024.”

Greco’s comments to INN reflect the same viewpoint — he pointed out that the approval process for spot Bitcoin ETFs came after years of legal disputes between financial institutions and the SEC.

“Regarding market reaction, we may witness a similar trend to BTC, albeit with potentially lesser impact,” he hypothesized. “Initially, there could be outflows from the Grayscale Ethereum Trust, offsetting inflows into other newly launched ETFs. However, once the outflow subsides, net inflows are expected to strengthen. Ethereum continues to attract significant interest, and financial products with ETH as the underlying asset could attract substantial investments.”