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Cryptocurrency is changing rapidly. Driven by advancements in blockchain technology, regulation and adoption, the market is looking like it will be changing again.
One of the seminal moments of Q3 2023 was the avalanche of applications for Bitcoin (BTC) spot ETFs (exchange-traded funds) by major asset management firms.
This was fueled by Grayscale Investments’ victory against the SEC in August 2023, which gave the firm a green light for its BTC spot ETF initiatives.
This surge in institutional interest is a sign of mainstream financial acceptance.
The technical upgrades in Ethereum’s ecosystem particularly the upcoming Cancun upgrade promise to redefine how decentralized applications (DApps) operate.
These exciting developments have set the stage for a transformative Q4.
BTC spot ETFs gain regulatory approval
In Q3, the world watched as traditional asset management giants threw their hats into the cryptocurrency ring.
BlackRock led the way with its application for a BTC spot ETF, followed closely by other players like Fidelity, Franklin Templeton, Valkyrie, Bitwise and VanEck.
This was not just a bandwagon effect but a strategic move to embrace an asset class that has proven its ability to stay in the game and stay profitable.
After Grayscale’s win over the SEC, BTC spot ETFs are set to gain regulatory approval.
A Henley and Partners Crypto Wealth Report showed that as of Q3 2023, there are approximately 425 million cryptocurrency holders globally.
Out of these, a little over 88,000 are ‘crypto millionaires,’ and nearly half have invested in BTC.
The coin’s substantial presence in affluent portfolios shows that it is a legitimate asset class that management giants simply cannot ignore.
Forbes Advisor also anticipates a bullish Q4, with BTC projecting an increase of 63.3% on the year-to-date and Ethereum set to increase by 40.2%.
Both BTC and Ethereum are up by 40.9% and 22% respectively as of time of writing.
Bitcoin halving and ‘four-year cycle’ theory
The four-year cycle theory in cryptocurrency was born from Bitcoin’s halving events.
Approximately every four years, Bitcoin’s mining rewards are halved meaning, the number of Bitcoins mined in each new block is reduced by half.
Some groups believe that Bitcoin’s halving event leads to price increases, which in turn affects the entire cryptocurrency market.
While this theory seems to have some degree of accuracy, there is no guarantee the four-year pattern will hold.
The cryptocurrency market is complex and influenced by multiple factors, including the global economy, market sentiment, tech development and regulatory shifts.
Ethereum Cancun upgrades and implications
The Cancun upgrade is set to improve the performance metrics of layer two.
This is especially relevant for projects within the OP ecosystem like Coinbase’s Base, Binance’s opBNB, Gitcoin, Celo and Loot, which adopted the OP Stack for infrastructure and application development.
Ethereum’s Cancun upgrade has far-reaching implications across abstract wallets, cross-chain bridges and decentralized storage systems.
The upgrade significantly enhances Ethereum’s data processing capabilities with an overhaul in the data storage method.
For Ethereum and its native currency, this positive development means a stronger position in a landscape that is well-known for experiencing rapid evolution.
The future holds strong
Q4 2023 is shaping up to be a defining period for the cryptocurrency market.
The anticipated BTC spot ETF approval and Ethereum’s Cancun upgrade are markers of more extensive changes on the horizon.
The crypto landscape is at last steering toward mainstream acceptance and integration.
Given the landscape, tokens with market caps below $5 billion are expected to have a higher chance of growth particularly when assessed across utility dimensions.
Utility has increasingly become the goalpost by which tokens are evaluated, especially as the market is inclined towards tokens that deliver on this front.
According to several trader forecasts, DeFi (decentralized finance) and tokens with high utility value are likely to rise as the hot sectors in 2024.
The rapidity of these developments only heightens the need for all market stakeholders to keep up with these changes, given the formative influence they may wield on future markets.
Whether it’s BTC making its way into traditional asset management portfolios or Ethereum and Avalanche pushing technical breakthroughs, the end of 2023 could look very different from its first quarter.
Amid this whirlpool of changes, tokens that can demonstrate real utility should find themselves at the van of market trends.
Ryan Lee is the research chief analyst at Bitget.
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