Bitcoin, once soaring with momentum earlier this year, has been sluggish in recent months, fluctuating between $56,000 and $63,000 throughout the second half of 2024. This marks a stark contrast to the first half of the year, where the leading cryptocurrency surged by 45%, fueled by the highly anticipated launch of U.S. exchange-traded funds (ETFs) tracking its spot price.
Now, as the year draws to a close, market participants are closely watching for new developments that could reignite Bitcoin’s trajectory. Beyond the usual market-moving events such as U.S. interest rate adjustments and the upcoming presidential election, crypto enthusiasts are eyeing potential catalysts for a fresh wave of volatility.
One such event is the impending launch of options on BlackRock’s spot Bitcoin ETF, which was approved by the U.S. Securities and Exchange Commission (SEC) last month. This new financial product could draw a fresh influx of U.S. retail investors, according to Jake Ostrovskis, a trader at UK-based crypto firm Wintermute.
“(ETF options) could increase Bitcoin’s market sophistication and volatility, driving greater institutional and retail engagement,” said Youwei Yang, chief economist at BIT Mining. He added that while Bitcoin is regulated as a commodity, any options linked to it may also require approval from the Commodity Futures Trading Commission (CFTC), which oversees commodity derivatives.
Bitcoin’s current lull comes after a remarkable year for the cryptocurrency market as a whole. Global anticipation around the approval of U.S. Bitcoin ETFs has driven activity, with the total market size swelling to $2.2 trillion as of October 1, 2024, compared to just $8.3 billion at the start of 2023, according to data from CoinGecko.
Institutional demand has surged alongside this growth. “We’ve observed a significant increase in institutional onboarding and trading activity,” said Ostrovskis, pointing out the demand for platforms and services that bridge the gap between digital assets and traditional financial structures.
Despite this, Bitcoin remains volatile, though less so than in previous years. Deutsche Bank data shows that Bitcoin’s 90-day volatility has decreased to 42% in 2024, down from 67% in mid-2020. Nevertheless, Bitcoin is still seen as one of the first assets to be sold off during periods of heightened uncertainty. For example, the cryptocurrency dropped 5% last week amid escalations in Middle Eastern conflict.
Meanwhile, crypto adoption continues to grow worldwide. Chainalysis’ Global Adoption Index, which tracks crypto use across 151 countries, indicates that global crypto adoption surged beyond the levels seen during the 2021 bull market, particularly between late 2023 and early 2024.
Lower-income nations with less developed financial systems are leading the charge. India ranks first in Chainalysis’ adoption index, followed by Nigeria, with several other emerging markets such as Indonesia, Vietnam, and the Philippines also making the top 20. Countries with high inflation, like Turkey and Argentina, have become hotspots for crypto adoption, as digital currencies provide alternatives to rapidly depreciating local currencies.
In Latin America, decentralized finance (DeFi) and stablecoin activity are also rising. “The value proposition for Bitcoin and stablecoins in Latin America are intact,” said Mauricio Di Bartolomeo, co-founder of crypto loan provider Ledn. He noted that while many emerging markets prefer to transact in dollars, they often have limited trust in their local banks.
The United States, while ranked fourth in the Chainalysis adoption index, remains the largest crypto market by transaction volume, followed by India. South Korea and China rank 19th and 20th, respectively.
As Bitcoin remains relatively stagnant, the market eagerly awaits the next wave of innovation and regulation that could send the cryptocurrency on another meteoric rise.
