The recent surge in Bitcoin’s (BTC-USD) price over $38,000 has ushered in a new wave of crypto enthusiasts. The much-anticipated Bitcoin ETF, potentially launching in 2024, has sparked renewed optimism for a bullish market trend.
But the excitement doesn’t stop at the ETF. Bitcoin has significant upcoming catalysts, such as the mining reward halving expected in mid-2024. This event, which happens every few years, slashes miners’ rewards by half, significantly influencing supply and demand dynamics over time. Given that mining rewards are the only new bitcoins entering circulation, halvings often precede major bull runs.
Moreover, macroeconomic factors are aligning in Bitcoin’s favor. Despite high interest rates, they are likely to drop in 2024 or early 2025. These lower rates, coupled with the ETF and halving, could create a perfect storm for crypto.
For those new to the crypto scene, less risky projects are crucial for long-term success. Let’s explore three major cryptos that could perform well in the next bull market, particularly if a Bitcoin ETF is approved soon.
Bitcoin is the clear frontrunner for any crypto portfolio at the moment. With several major catalysts on the horizon in 2023 and 2024, it could trigger the next significant bull run. As digital gold, BTC’s inherent scarcity and capped supply are unmatched by any other crypto, with only 21 million BTC ever to exist.
However, Bitcoin is not without its drawbacks. The network is relatively slow and inefficient for payments compared to newer cryptos, with transactions taking over an hour to process and high fees due to congestion issues.
When considering adding crypto exposure or balancing a portfolio with uncorrelated assets, Bitcoin should be the first choice. Unless a catastrophic event shatters trust in crypto entirely, Bitcoin has likely seen its final bear market bottom around $15,000-$17,000.
With the macro backdrop improving in 2024, a Bitcoin crash seems unlikely. As noted in June 2022, Bitcoin was not expected to drop below $15,000, even in the worst-case scenario. Indeed, it bottomed around that level. Furthermore, $25,000 might be the new floor once the ETF goes live.
Ethereum (ETH-USD), while different from Bitcoin, has proven to be an exceptional long-term investment. As the second-largest crypto by market cap, Ethereum dominates the smart contracts and Web 3.0 spaces. It allows decentralized apps and services to run on its network via the Ethereum Virtual Machine (EVM). In contrast, Bitcoin’s capabilities are quite limited to maximize security, supporting only peer-to-peer payments out of the box.
Post-Merge, ETH supply has become deflationary. More ETH is now removed from circulation via network burns than issued as staking rewards. The supply is decreasing by 1.75% annually, far below the Bitcoin inflation rate.
However, Ethereum lacks Bitcoin’s hard cap on supply, which some investors view as a disadvantage. So, while an unlimited supply may seem concerning in theory, network activity and burn dynamics act as a “soft cap,” keeping inflation below Bitcoin’s. Also, an unlimited supply future-proofs Ethereum, ensuring that stakers still receive adequate future rewards, long after further supply decreases.
Lastly, Ethereum stands to benefit from the accelerating adoption of Web 3.0 and crypto. While Bitcoin operates as a relatively simple payment network, Ethereum is an entire ecosystem for decentralized computing. Notably, Ethereum’s correlation to Bitcoin remains high. ETH initially massively outperformed BTC but has lagged recently as the crypto focus returned to being a hedge against inflation.
However, if Bitcoin experiences another parabolic bull run in 2024-2025 due to the halving, ETF approval, and macro backdrop, Ethereum is likely to benefit as well. Similar to the 2017-2018 bull market, while BTC may rise faster initially, ETH can often surpass its gains in the later speculative frenzy stages.
Litecoin (LTC-USD) can be viewed as a smaller sibling to Bitcoin, with higher risk and reward potential. As one of the oldest and most established crypto projects, Litecoin is essentially a faster Bitcoin fork with lower fees and a few tweaks. It operates similarly, capped at 84 million LTC instead of 21 million BTC. Most of its code is identical.
Therefore, Litecoin’s correlation to Bitcoin price action tends to be very high. However, LTC generally amplifies BTC moves in both directions. When Bitcoin rises or crashes, Litecoin usually does so even more dramatically, as seen in 2013, 2017, and the recent 2022-2023 crash. With its smaller $5.3 billion market cap, LTC remains more volatile and speculative than the blue-chip-like BTC.
So, if Bitcoin indeed triggers a new bull market in 2024, Litecoin seems poised to massively outperform it. Plus, it could be a safer, smaller-cap play than 99% of altcoins. Although the use case remains questionable, the correlation and historical precedent remain.
Let us know what you think, please share your thoughts in the comments below.
