The digital asset market has experienced positive developments throughout the year with significant institutional inflow into the market in Q4 2023 as asset prices continue to rise.
CCData's Q4 2023 market forecast report shows stronger market sentiment, Bitcoin (BTC) dominance, growth in crypto funds and institutional demand, and increasing optimism about Bitcoin's position in exchange-traded funds (ETFs).
This report highlights the narratives that have shaped the entire trading year, including expectations for the future as traders and miners look to recoup previous losses and stay well-positioned ahead of the next halving.
Bitcoin hard way
According to the report, bitcoin market resilience dominates much of the narrative, with the primary asset up 156% year-to-date. The cryptocurrency's rise has outperformed traditional assets and benchmarks such as the S&P 500, NASDAQ, and gold.
Overall, all asset classes performed better compared to the previous quarter as broader macroeconomic factors turned positive following rising inflation that hit many markets for months, the report said.
“Given the forward-looking nature of markets, especially highly reactive assets such as technology stocks and cryptocurrencies, investors who expect inflation and interest rates to peak by mid-year are well positioned to profit from bullish speculation in growth investments high, providing extraordinary benefits. ”.
This year was marked by an improvement in Bitcoin's fundamentals, which emerged from a bearish period in 2022, when the asset lost more than 55% of its value. BTC showed initial signs of growth in the first quarter, but actually reversed course in the second quarter with the recovery of institutional confidence in the market.
An important and significant part of BTC's trajectory was the introduction of ETFs by BlackRock and other traditional financial firms, which pushed the price above $31,000 before correcting slightly and breaking above $40,000.
At the time of writing, Bitcoin is trading at $42,900, up 19% over the past month, thanks to renewed ETF optimism. Although the SEC has not approved an immediate application for a BTC exchange-traded fund due to concerns about market manipulation, there are still rumors among companies demanding restructuring, and experts expect approval to be imminent.
Half of it and has an impact on assets under management
The main indicator of bullish sentiment around Bitcoin is the upcoming halving, which has proven to be associated with rising prices. The upcoming halving has changed the way miners work: rising prices erase previous losses and make it more profitable to increase efficiency.
“…This is because the rate of new bitcoin issuance has been cut in half. Bitcoin currently has a supply of 19.6 million Bitcoins with an average release rate of 6.25 Bitcoins every 10 minutes. The number is expected to increase to 3,125 bitcoins, adding to the level of... scarcity of the largest digital asset.”
The report also analyzes the increase in Bitcoin products and assets under management (AUM). This year, capital inflows into Bitcoin products exceeded $1.7 billion, and total cryptocurrency assets under management exceeded $44 billion, an increase of 150%.