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Nuestra Academia de Negocios y economía
Greetings from the TruBit team!
Big thanks to all TruBit users for being with us this year. We hope you liked reading our articles and using TruBit & Pro to trade, spend, and earn more! We really enjoy making this product for you.
Hoping you all had a lovely holiday, and we're excited about another awesome year together with you in 2024!
We have learned to operate conservatively through a tough market in 2023. For most part of this year, the market is in the bear situation but toward the end of the year, multiple news brought a hype and we saw the crypto market had a remarkable transformation. This growth suggests a significant shift from the previous slow phase, moving beyond the crypto winter. While it’still early to define this trend conclusively, the market's resilience and advancement are clear indications of its staying power. Year of 2023 has been about overcoming challenges and setting the stage for further innovation in the crypto world.
The cryptocurrency landscape in 2023 has witnessed remarkable growth, with leading tokens like Bitcoin, Ethereum, USDT, and SOL at the forefront. This surge in value, particularly noticeable in Bitcoin and Ethereum, aligns with the overall market trend, where ten major marketcap tokens have made significant strides. Among these, stablecoins have also seen a notable rise in their market cap, thanks to the burgeoning development of the crypto area. This trend is not just about numbers; it highlights the escalating prominence of cryptocurrencies in the financial world, outshining traditional assets in 2023.
Source: CoinMarketCap
2023 has been a landmark year for Bitcoin, signaling a shift towards wider adoption and increasing interest from new investors. Glassnode's data reveals a rise in smaller Bitcoin holdings (more than 0.01 BTC), a testament to the growing engagement from retail investors. Despite the volatility in the financial markets, Bitcoin has carved out a reputation as a secure and attractive investment option, capturing the attention of mainstream investors. This transformation underscores Bitcoin's journey from being a niche asset to becoming a key player in the mainstream financial arena.
Source: Glassnode
Bitcoin's recent achievements extend far beyond just expanding its market. It's sparked a major shift in how big financial players and public companies approach and invest in cryptocurrencies. These institutions now hold significant amounts of Bitcoin, showcasing a surge in overall investor confidence. A key factor in this change is Bitcoin's skillful integration of new financial offerings into its decentralized setup, attracting interest from both long-established financial institutions and major public companies.
Even with market ups and downs, these traditional financial giants are doubling down on Bitcoin, as seen in their growing investments, especially those with large Bitcoin portfolios. The consistent flow of investment from these influential players, along with a spike in interest from institutions as the year ends, highlights Bitcoin's strength and its growing popularity in the ever-evolving cryptocurrency market.
Source: Buy Bitcoin Worldwide
Looking ahead to 2024, economic indicators in the United States signal a potential shift towards a strong bull market. The Federal Reserve is likely to halt interest rate hikes, with a possibility of reductions, which bodes well for the economy, especially in an election year. While a slight uptick in unemployment is expected, largely due to changing workforce demographics, the overall economic outlook remains optimistic with projections of robust GDP growth to 2.5, driven by stable consumption, disposable income growth, and a resilient labor market.
Source: Goldman Sachs Global Investment Research, Bloomberg
Recently, The Federal Reserve (the Fed) is working on steering the economy through these choppy waters, especially as they try to keep inflation in check. As we're getting over the inflation, the usual economic rules are starting to apply again. One key thing to watch is how higher interest rates might slow down economic growth. Keeping these rates high for a long time can be hard on businesses, especially smaller or private ones. This could mean slower growth in business and fewer new jobs. On the brighter side, the US has been doing better than expected when it comes to getting things done efficiently and having enough people ready to work. This has helped ease some of the job market pressures, even though the economy has been growing faster than usual.
The Federal Reserve is leaning towards potential interest rate cuts in Q1 2024, despite Chair Jerome Powell's caution. After a series of rate hikes from March 2022 to July 2023, the Fed recently kept rates between 5.25% and 5.50%. Market sentiment is shifting towards expecting rate reductions, with Treasury bond yields dropping. The latest Fed forecasts suggest three rate cuts in 2024, potentially lowering rates to 4.50% to 4.75% by year-end, with a possibility of up to six cuts, reaching 3.75% to 4.00% by late 2024. This shift reflects expectations of declining inflation, with core PCE inflation expected to drop from 3.5% in October 2023 to 2.4% by March 2024.
Powell acknowledges the possibility of rate cuts even before hitting the 2% inflation target if the path is clear. Additionally, current rates are viewed as restrictive compared to the Fed's long-term expectation of 2.5%, potentially requiring significant normalization, even without a recession, especially if core PCE inflation falls to 2% year-over-year in Q4 2024, below the Fed's 2.4% forecast.
Source: MorningStar
We see that 2024 is going to be a landmark year for Bitcoin, attracting significant interest from both institutional investors and everyday users. Enhanced regulations are making cryptocurrencies more accessible and reliable, with Bitcoin leading the pack. Despite the emergence of GameFi, DeFi, and NFTs, Bitcoin's value, surpassing $43,000, signals its growing popularity. Efforts to simplify Bitcoin usage, alongside the anticipated launch of Bitcoin ETFs, are expected to mainstream Bitcoin investment. The halving event in April 2024 adds further intrigue, particularly with the volatile economy, emphasizing Bitcoin's growing importance in the diverse world of cryptocurrencies.
Cryptocurrency markets are optimistic about significant user growth in the crypto sector for 2024, with Statista estimates ranging between 850 and 950 million users contingent upon favorable market conditions. Despite the challenges faced by cryptocurrencies in 2023, foresee continued industry expansion, possibly reaching nearly 800 million users in 2024, underscoring the growing global interest in crypto assets.
Source: Statista
In early 2024, we observed a significant decline in inflation, largely attributed to the Federal Reserve's monetary strategy. This downward trend, coupled with a slight economic slowdown, points to a weaker US Dollar Index in 2024, which is likely to create favorable conditions for cryptocurrencies. Trading View data suggests an inverse relationship between Bitcoin and the US Dollar Index, indicating that a positive economic climate with lower inflation and a weaker dollar is beneficial for the crypto market in 2024.
Notably, Bitcoin's dominance is expected to exceed 60% for the first time since Q1 2024. Despite the potential for diversification into riskier assets, a strong institutional focus on Bitcoin is anticipated at least until mid-2024. The growing interest from traditional investors and the general public further reinforces Bitcoin's dominant position in the near future.
Source: Trading View
In early January 2024, the crypto world is abuzz with the possibility of Bitcoin Exchange-Traded Funds (ETFs) getting the green light. This could be a game-changer, much like how the gold market boomed. What makes this so exciting for investors, especially those looking at long-term options like retirement funds, is that Bitcoin might become a mainstream investment choice. This isn't a done deal yet, as the U.S. Securities and Exchange Commission (SEC) is still weighing its decision. But if it goes through, it means big-time investors could start pouring money into Bitcoin while it stays true to its original vision. It bridges the gap between traditional investment methods and the new digital asset world.
Throughout 2023, there were some significant moves in this direction, with major financial players applying for Bitcoin spot ETFs. The SEC has been carefully reviewing these applications, which involves a lot of scrutiny, public input, and maybe even some changes to the proposals. Despite the hurdles and the wait, as of January 2024, things are looking more favorable for these ETFs to get the nod. The crypto community is on the edge of their seats, hoping for a positive decision.
Source: CoinoTag
The anticipated Bitcoin halving in April 2024 is set to decrease mining rewards, a move expected to significantly impact Bitcoin's market value. This event, coupled with the potential approval of Bitcoin ETFs, could lead to a substantial surge in Bitcoin's price, mirroring previous halving events. The mining community is preparing for this change, with an increased hash rate and rising Bitcoin prices potentially offsetting the reduced block reward, underscoring Bitcoin's resilience and appeal.
Source: IG Group
In 2024, Bitcoin's scalability remains a critical focus, with significant advancements in both Layer 1 and Layer 2 solutions. The ongoing evolution of Bitcoin is marked by a commitment to extending its capabilities while preserving its foundational stability and decentralized ethos. Layer 2 protocols, including the Lightning Network and emerging sidechains, are at the forefront of this evolution. These protocols are designed to enhance Bitcoin's functionality, offering interoperability and additional features without making tradeoffs or compromising the network's decentralization. Bitcoin's approach to scaling involves a modular architecture that mirrors its ethos of minimal trust and maximal capability extension.
The base layer remains simple and unchanged, ensuring permissionless access, while layered protocols build upon this foundation to provide a range of applications. These include fast payments, sophisticated smart contracts, and features that require high throughput and privacy, all leveraging Bitcoin's inherent durability. The layered structure allows Bitcoin to maintain its stability as a settlement base layer, while simultaneously fostering innovation and versatility in higher layers to meet diverse needs.
In 2024, Bitcoin's capabilities are being significantly augmented through the integration of Rootstock (RSK), Stacks, and advancements in the Lightning Network (LN). RSK enables more complex transactions, ensuring high security and throughput by utilizing merged mining with Bitcoin, despite challenges in broad user adoption and miner support consistency.
Stacks contributes by introducing smart contracts and a robust development ecosystem, marked by significant recovery in its native token STX and the introduction of key upgrades like decentralized mining and Bitcoin bridges. However, Stacks also faces its own set of adoption challenges. Complementing these advancements, the Lightning Network (LN) has shown remarkable growth in 2023, further enhancing Bitcoin's functionality. Over 5,400 BTC, valued at over $230 million, flowed through LN's payment channels, a significant leap from the 1 BTC capacity in 2018. This expansion was supported by the emergence of over 70 LN-enabled wallets and was further bolstered by the launch of the Taproot Asset Protocol v0.2.
In 2024, the Bitcoin ecosystem has undergone significant transformation with the launch of the Ordinals and BRC-20 protocols, both leveraging the Taproot upgrade's expanded data capabilities. The Ordinals Protocol, introduced in early 2023, has redefined Bitcoin's smallest unit, satoshis, turning them into data-rich assets capable of hosting unique digital artifacts and NFTs. Building seamlessly on this foundation, the BRC-20 protocol further enhances Bitcoin's tokenization landscape by enabling the creation of unique tokens with advanced functionalities like JSON data embedding.
This is highlighted by the launch and rapid market cap growth of the $ORDI token. These advancements not only expand Bitcoin's utility in digital collectibles and complex DeFi architectures but also spur critical discussions about the implications for protocol centralization, numbering schemas, and the broader impact on Bitcoin's transaction fees and scalability.
Source: Galaxy Research
In the realm of technology, AI and cryptocurrency are powerful forces, each with its unique strengths and weaknesses. However, a thoughtful integration of these two groundbreaking technologies holds the potential to address each other's shortcomings. We are witnessing a rise in projects that merge AI and web3 technologies, incorporating elements like monetization, provenance tracking, and digital content attribution. As AI's capacity to generate content surpasses human capabilities, we may soon rely on on-chain attestations for content verification. Additionally, AI agents are poised to handle most on-chain payments, simplifying transactions for users. Furthermore, AI is set to assist in code audits for smart contract creation, making DeFi protocols more secure.
The convergence of crypto and AI promises significant potential, despite the initial hype-driven projects. Whether it's AI agents navigating crypto markets, decentralized compute protocols offering GPU access, or blockchain projects transforming into AI marketplaces, the possibilities are vast. While the exact use case that sparks adoption remains uncertain, the fusion of crypto's freedom with AI's capabilities presents an exciting opportunity that we'll closely watch in 2024.
Artificial intelligence is a technological system that mimics human intelligence. It enables machines to learn, understand, reason and solve problems by mimicking the human mindset and ability to perform tasks. Meanwhile, with the development of the times, artificial intelligence occupies an increasing part in our daily life.
The volatility and complexity of the cryptocurrency market makes the development of trading strategies extremely important. Smart algorithms of Artificial Intelligence can optimise the benefits and returns of trading strategies by analysing huge amounts of historical trading data and identifying potential patterns and trends. The application of machine learning and deep learning technologies could make trading decisions smarter and more accurate, helping investors to achieve better returns on their investments in the cryptocurrency market.
We can see that AI could drive strategy optimisation for cryptocurrencies in the following ways: Data analysis and prediction, Automated trading, High-frequency and Algorithmic Trading, Risk Management and Model Optimisation and finally Sentiment analysis and opinion monitoring.
AI is the technology that enables machines or computers to exhibit human-like intelligence, i.e. take certain inputs, understand the goal, and enact actions or decisions that achieve that goal, in a fully automated way.
And crypto is no exception, much like AI, the blockchain and cryptocurrency industry is branching out in multiple directions: decentralized finance, decentralized autonomous organizations, NFTs, the metaverse, and so on. And AI can play a significant role in shaping the future of these technologies.