Bitcoin is in for a "very explosive" year in 2024, from exchange-traded funds (ETFs) to legislation and regulation in crypto assets, an expert told Anadolu.

"From the exchange collapses and corporate fallout of 2022, to the regulatory battles of 2023, the crypto industry is still here and growing," said Brandon Zemp, CEO of BlockHash LLC, a blockchain consultancy providing educational resources for small business owners, students, developers, and investors.

Bitcoin, as well as other cryptocurrencies and some stable coins, which are pegged to the value of a separate asset, crashed in 2022 amid several crises, including the bankruptcy of several companies and exchange platforms, causing turmoil in the market as a lack of regulation and accountability has shaken investor confidence in digital currencies and tokens.

The size of the entire crypto market plummeted to around $790 billion by the end of 2022 — down almost 65% from its $2.25 trillion close in 2021 as more than $1.4 trillion evaporated that year, according to data compiled by Anadolu. Once the world's third-largest cryptocurrency exchange by daily trading volume, FTX's collapse in late 2022 also led to a sudden meltdown in the crypto market.

"Crypto is cyclical by nature. That's an inevitable fact. But many of the collapses have come as a result of overzealous, laser-eyed investors buying colorful JPEGs and creating vaporware for the sake of taking an investors money. Every industry attracts a similar crowd, especially when there's an opportunity to profit," said Zemp, who is author of the book, "The Future Economy: A Crypto Insider’s Guide to the Tech Dismantling Traditional Banking."

Sam Bankman-Fried, the former CEO and founder of Bahamas-based cryptocurrency trading platform FTX, is currently on trial in a New York federal court, facing eight charges — conspiracy to commit wire fraud and securities fraud, standalone charges of conspiracy, securities fraud and wire fraud, money laundering and conspiracy to defraud the US, as well as campaign finance violations.

After the US Securities and Exchange Commission (SEC) in June filed 13 charges against Binance, the world's largest cryptocurrency exchange platform, the company agreed in November to plead guilty to criminal charges, forfeit $2.5 billion to the US government and pay a fine of $1.8 billion. Its CEO Changpeng Zhao pled guilty to several criminal charges in the US and resigned from his role.

Regulations

"The good news is that crypto is here to stay and bad actors are constantly being flushed out of the market, driving more awareness for better practices and safeguards. A bull market is on the horizon again, and this one might be more stable and last longer due to bad actors being removed from the industry," said Zemp.

The expert, who hosts the podcast "Blockhash: Exploring the Blockchain," where he interviews top executives and founders in the industry, emphasized that regulations are very important and have the potential to either elevate or disrupt any industry.

"In the past two years, there has been a lot of regulation by enforcement, which has led to a lot of disruption. But I'm hopeful for the direction crypto is heading entering 2024, as there is US legislation on the table to help bring regulatory clarity to the market," he said.

Zemp noted that there were instances when the courts have started to side with crypto companies that were being attacked by the US regulators like the SEC.

Ripple Labs, owner of the currency exchange Ripple or known by its native cryptocurrency XRP, faced legal action in December 2020 from the SEC, which claimed that the company was selling unregistered securities. After years of legal battle in court, a US judge ruled this July in favor of the firm, coming to the conclusion that XRP, as a token itself, is not a security.

"I would hate for things to be decided in court, but there is hope for an actual crypto bill in 2024," said Zemp. "In the meantime, regulators will continue to plunge their fangs into the industry, and crypto will continue to resist."

Rebound with hope on ETFs

Despite all the turmoil, Bitcoin saw its price strongly rebound in early December, climbing above $44,000 for the first time since early April 2022 amid investor optimism that spot Bitcoin ETFs would get approval in the US.

ETFs are a type of investment fund traded on a stock exchange with their own financial assets such as equities, currencies, debts, futures contracts, and commodities, with spot Bitcoin ETFs primarily owning Bitcoin.

Zemp highlighted that many investors are optimistic about the long-term market effects that a spot Bitcoin ETF may bring to the crypto market, mainly investments from asset managers, sovereign wealth funds and other institutional investors. "This will bolster Bitcoin's price and help bring Bitcoin to the masses as a mainstream asset," he said.

While stopping short of explicit forecasts for specific cryptocurrency or crypto assets, he stressed that crypto is a "very cyclical industry and it feeds off of market momentum."

"Factor in ETFs, Bitcoin's halving, a presidential election, crypto legislation and US dollar inflation, you have yourself a very explosive 2024 waiting in the lineup," he concluded.