Crypto Market: November 2024 Update
There are many positives in the crypto world at the moment: with Bitcoin recently attaining an all-time high, renewed inflows into Exchange Traded Funds (ETFs) and with market sentiment betting on an ex-president Donald Trump win, especially as he is a crypto convert. Many experts confirm that recently the market has been dominated by the performance of Bitcoin, however, underneath all the confidence, there is a growing concern that some of the once perceived “hot assets” are struggling.
There appears to be a split in the cryptocurrency performances with Bitcoin and Solana up circa 64% since the start of the year and Elon Musk and Memecoin are up a staggering 80%. However, the so-called altcoins* of Algorand, Polkadot, and Polygon all took a beating. Venture Capital deals have yet to recover from the crash that came after the 2021 bull market, with data showing investment in digital-asset start-ups falling by 20% in the third quarter on a quarter-on-quarter basis.
*Altcoins – These are alternative cryptocurrency to Bitcoin; they are rapidly multiplying and can be subject to extreme volatility.
Elsewhere, crypto exchange Coinbase Inc announced earnings estimates were missed and their rival crypto exchange Kraken has been rumoured to cut the workforce by 15%. DYdX trading announced recently that they will be making redundant in excess of 33% of their workforce and Consensys, whose main business is providing software for the Ethereum Network, has announced they are trimming their workforce by circa 20%.
Consensys and many other associated crypto companies are attributing their current woes to a certain extent to the SEC (US Securities and Exchange Commission) and their lack of clarity surrounding regulations. Interestingly, if elected, Ex-President Donald Trump has announced he will fire the Chairman of the SEC Gary Gensler. One expert recently announced that due to regulatory uncertainty, many large US operators and centralised exchanges will potentially incur higher costs.
Furthermore, one expert advised that some of the digital-asset companies, due to their technologies, are struggling to generate revenues, which added to the perceived increase in costs may well be behind the recent announcements of workforce cuts. It has also been noted that many blockchains which were being looked upon as alternatives to Bitcoin have gone into decline, again possible due to crypto start-ups not receiving the required investment funds.
There appears to be a disconnect in demand and supply due to the bifurcation or fragmentation in the crypto arena. However, on the positive side, Bitcoin, the on-going poster boy for cryptocurrencies and the crypto market in general, is going from strength to strength. Furthermore, the introduction of Bitcoin-backed Exchange Traded Funds in January 2024 has paved the way for adoption by wall street and a massive inflow of funds. An example of this is BlackRock Inc’s iShares Bitcoin Trust which, on Wednesday 30th November, saw a record inflow for a single day of USD872 Million. Donald Trump has vowed to turn the United States into the crypto capital of the world, and whilst this is good news for the crypto market, the industry will have to get its underbelly in order.
