Bitcoin spot ETFs have finally arrived in the crypto world and they’ve landed with a bit of a thud.
After months of speculation and price appreciation it appears that ETFs are, at least for now, a sell the news event with BTC price down significantly.
Now that ETF season is over there are other narratives that are going to take shape in 2024. Let’s discuss other big stories that could arise in 2024 after ETFs.
Regulation is likely the most important narrative for crypto that’s left after spot ETFs get approved. The approval of spot ETFs itself is a form of regulatory change that is certainly needed. But, the lack of clarity and unified laws when it comes to crypto assets both across and within countries makes it difficult for the sector to flourish.
The US is a great example of this, as you have both welcoming and resistant states and government bodies. The SEC thinks almost all digital assets are securities, while the Commodities Futures Trading Commision (CFTC) thinks they’re almost all commodities. They can’t both be right, but they both affect US markets.
The SEC finally lost its suit of Ripple Labs in the summer of 2023, while also being ordered by the courts to review their denial of spot Bitcoin ETFs. Both of these decisions were great for the crypto sector and showed the poor regulatory decisions that the SEC has been making over the past few years.
Unlike the US, the EU is getting close to passing their Markets in Crypto Assets (MiCA) framework in parliament. This will provide investors and developers with clear guidelines, rules for taxation, and more when it comes to their digital assets, especially the decentralized finance (DeFi) aspect, which will help both of our other narratives.
Regulation has to truly take shape for this next narrative as well, but adoption of blockchain technologies is possibly going to be one of the biggest stories of the year. It’s one thing for the price of Bitcoin and a variety of assets to hit new all-time highs, but it will be more important for blockchain networks to be seeing more and more activity to justify these prices.
When the EU passes the MiCA framework, it will allow investors to know all the fees and guidelines they need to be aware of when making their investment decisions. This makes it easier for them to make those decisions. Then they can start to use things like decentralized finance protocols without as much concern that the government will punish them in some way or another for doing so.
Adoption of blockchain technology applications such as DeFi platforms could be the catalyst the sector needs to explode, especially as traditional finance faces so many issues in regards to inflation, slow transaction times, and a variety of redundant fees.
Real World Uses (DeFi and More)
Much like how adoption of blockchain technology is an important narrative for the sector, real world uses for it becoming clear and functional are also incredibly important. There wouldn’t be a point in investing in Chainlink (LINK) if there was no real world utility for it. That’s why it’s important for companies to provide real world use cases for their products.
Chainlink did this, working with Vodafone Digital Asset Broker (DAB) on a proof of concept on trade document transfer with Web3 services platform Chainlink Labs, Sumitomo Corporation, and InnoWave. The companies used Chainlink’s Cross-Chain Interoperability Protocol (CCIP) with DAB to provide security and interoperability across Internet of Things (IoT) devices at the edge of a network. When implemented, this could provide a single simple interface that allows applications to securely exchange data and tokens across both public and private blockchain networks, along with IoT networks.
This real world use concept shows the potential for secure, trustable, and traceable data for use in smart contracts and even blockchain and AI applications. However, the most likely real world use cases to take off after the ETF narrative are DeFi ones.
Being able to fully control finances, take out loans, send money around the world, and more, through DeFi is extremely useful and powerful. Not to mention the costs to do all of these things are exponentially cheaper than if you used traditional methods for them such as sending money across borders through Money Mart or a similar service.
A shift from traditional finance to DeFi is the narrative many in the sector want, and it’s certainly more likely after ETFs get approved.
The digital asset sector has come a long way over the past year, going through its ups and downs, good news and bad. The fundamental basis behind investors’ interest in crypto hasn’t changed throughout any of those fluctuations. It remains a potentially disruptive technology that could reshape how many interact with finance and more. However, until ETFs are approved and the market is allowed to truly work within a legal framework, that could take us past 2024.