11 January 2024
Renowned analyst Ted (@tedtalksmacro) has offered a detailed forecast for 2024 in the crypto market. His analysis on X (formerly Twitter) touches on several critical points, from macro events, the Bitcoin Halving to fresh liquidity in the market.
This is going to be quite a long post, summing up 2023 and looking ahead to the themes to watch if you’re investing in 2024 – so please bare with me
Summing up 2023
– China printed almost $1 trillion dollars but failed to push their economy out of the dumps– US…
— ted (@tedtalksmacro) January 11, 2024
#1 Spot Altcoin ETFs
Following the approval of spot Bitcoin ETFs and the anticipated approval of spot Ethereum ETFs, there is an expectation for a broader range of altcoin ETFs to emerge. Ted believes that the success of these initial ETFs will pave the way for more proposals and approvals, potentially by 2025.
He states, “The SEC has laid the precedent for many other crypto products to be proposed and approved, opening up even more avenues for large capital inflows into the crypto asset class.” Ted specifically mentions Solana and XRP as likely candidates for future ETFs. This development is seen as a significant step in attracting substantial capital inflows into the crypto asset class.
#2 The Federal Reserve Ending Quantitative Tightening
Ted forecasts that the Federal Reserve might cease or significantly slow down its current quantitative tightening (QT) program by Q3 of 2024. This prediction is based on the declining cash balance in reverse repos and aims to avoid a repeat of the funding stress experienced in 2019.
“An end to or a dramatic slowdown of the current QT programme could come even earlier though, given the scars of what happened back in 2019 following the monetary tightening of 2018,” he predicts. An end to QT could inject more liquidity into the market, potentially benefiting crypto assets.
#3 Resurgence Of Liquidity In Crypto
After a challenging period of 18 months marked by the collapse of crypto funds and exchanges and central bank tightening, Ted anticipates a return of liquidity to the crypto space. He points to stablecoin liquidity deltas approaching positive territory and the role of spot Bitcoin ETFs in attracting new capital, especially from investors seeking higher returns amid inflationary pressures.
#4 Bitcoin’s Halving Event
The anticipated Bitcoin halving in April 2024 is expected to create both a supply shock (due to reduced mining rewards) and a demand shock (following the approval of spot BTC ETFs). Historically, halvings have catalyzed significant price movements in Bitcoin, and Ted expects a similar pattern in 2024, with potential for substantial price increases following a brief post-halving sell-off.
#5 Inflation Stabilization
On the topic of inflation, Ted observes, “It typically takes 12-18 months for the full effects of changes in monetary policy to be felt in the economy, and we are verging into that territory now.” Despite the base effects of the 2021/22 inflation fading, Ted foresees a slight resurgence in inflation as economies continue to operate robustly.
However, he believes the central banks’ commitment to maintaining higher interest rates will cap the inflation rate below previous highs. He views this as an integral aspect of a strong economy and market.
#6 AI Advancement
Having witnessed AI go mainstream in 2023, Ted predicts 2024 to be a year of unprecedented improvements in AI technologies. This advancement is expected to boost AI stocks, crypto, and related products, enhancing productivity and potentially leading to deflation in developed economies.
#7 Dispelling Recession Fears
Contrary to predictions of a major recession, Ted anticipates continued economic growth, albeit at a slower pace than in 2023. Ted says, “Those calling for a recession akin to 08 or the Great Depression are likely to be disappointed… again.” He attributes this resilience to governments’ aggressive fiscal policies, including substantial cash injections and running large deficits.
#8 China’s Continued Monetary Expansion
Ted notes that China, struggling in the post-COVID era, is likely to continue its aggressive monetary policy, as evidenced by nearly $1 trillion printed in 2023. He draws parallels with Japan’s situation in the 1990s, highlighting China’s focus on stimulating production over its flailing property market.
In summary, Ted’s analysis for 2024 presents a complex and dynamic picture of the crypto market, influenced by macroeconomic factors, regulatory developments, technological advancements, and geopolitical forces. These trends suggest a year of significant opportunities for investors in the crypto space.
At press time, BTC traded at $47,244, up 5.1% in the last 24 hours.