On Wall Street, the trend is your friend. And that’s especially true in the crypto markets, where getting ahead of megatrends can be the key to spotting new investment opportunities and unlocking new wealth. With that in mind, here are three crypto megatrends that should be on your radar in 2024.
Bitcoin finally goes mainstream
Arguably, Bitcoin (BTC 2.74%) is already mainstream, especially with younger investors. According to a Motley Fool survey from 2022, 54% of Gen Z investors and 60% of millennial investors already hold cryptocurrency in their portfolios. But Bitcoin is really poised to go mainstream in 2024, with the launch of the first-ever spot Bitcoin ETF for the U.S. market.
There’s already been a lot of buzz about what this new financial product will mean for investors. Some Bitcoin bulls have called it the most important product launch on Wall Street in 30 years. Some have predicted it could unleash a giant tsunami of $25 billion or more into crypto, pushing up the price of Bitcoin.
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While numbers can vary significantly, one thing is clear: The new spot Bitcoin ETF could make crypto acceptable to people who have never before considered it. You won’t need to trade Bitcoin on a cryptocurrency exchange. You won’t need to set up a crypto wallet. And you won’t need to worry about getting involved in an unregulated wild west crypto market. Instead, you’ll be able to buy Bitcoin as easily as any other ETF. The long-term impact could be critical for Bitcoin.
The start of the next big crypto cycle
The second big trend also comes from Bitcoin. This one involves an event known as the Bitcoin halving, now scheduled for April 2024. This event occurs only once every four years and, as such, is eagerly anticipated by the crypto market. In a halving, the reward paid to Bitcoin miners is cut in half, resulting in a slowdown in the Bitcoin supply growth rate.
The halving event has set off unprecedented bull market rallies for crypto in three past halving cycles (2012, 2016, 2020). According to Wall Street firm Morgan Stanley (MS 0.70%), this cycle can last anywhere from 12 to 18 months. And, says Morgan Stanley, it’s imperative that investors invest at the start of this cycle. The firm compares it to planting seedlings and watching them grow. If you don’t plant these seedlings at the right time (i.e., during growing season), they will never flourish.
While Bitcoin is the obvious choice for a crypto that will benefit from the start of this new cycle, plenty of other cryptos could go along for the ride. Historically, Bitcoin’s gains have taken the entire market higher, and it is quite possible that other cryptos could end up outperforming Bitcoin.
The rise of new digital assets in the crypto market
Finally, one important trend to monitor is the rise of new digital assets. These digital assets are created using the same blockchain technology used to create traditional cryptocurrencies. However, they come with new properties that make them desirable to investors. In the past, examples have included non-fungible tokens (NFTs) and virtual real estate in the metaverse.
In 2023, Bitcoin Ordinals were the newest digital asset that caught the attention of crypto investors, with Forbes calling them “the next big thing in crypto.” Ordinals are a special type of NFT created specifically for the Bitcoin blockchain. They can be traded just like NFTs, and funds have even been created to invest in them specifically. They have become so popular that the trading volume of the most popular Ordinals now surpasses the trading volume of the most popular NFTs.
But that’s just the start of what’s possible. The ultra-long-term trend I’m watching is called “asset tokenization,” and it’s going to be big. Asset tokenization refers to the process of converting real-world assets into digital assets that live on the blockchain. These real-world assets can range from traditional assets (think stocks and bonds) to less traditional assets (such as art or wine collections). Once on the blockchain, they can be traded just like any cryptocurrency. Some estimates say this could eventually be a $10 trillion market opportunity.
Long-term mindset
It’s up to you to decide, of course, how sustainable these trends really are. In some cases, what looks like a long-term trend might just be a short-term fad, and vice versa. Back in 2009, many people thought the rise of Bitcoin and the concept of “digital money” were just fads, but they have shown remarkable staying power.
Just keep in mind that the point is not to “market time” these trends but to understand how they play out over the long haul. If you are a long-term investor, you should be focusing on big macro trends that build wealth. Doing so could put you on the path to millionaire status.
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