Cryptoverse: Bitcoin’s Search for Direction After Early-Year Surge

Bitcoin, the dominant cryptocurrency, has been relatively stagnant over the past three months, following a dynamic start to the year. After an impressive 45% surge in the first half of 2024—largely driven by the launch of U.S. exchange-traded funds (ETFs) tracking its spot price—bitcoin has now settled into a range between $56,000 and $63,000.

As the year draws to a close, investors and analysts are on the lookout for fresh catalysts that could spark new momentum for the cryptocurrency. Beyond global market influences such as changes in U.S. interest rates or the upcoming American presidential election, the crypto world is keenly eyeing developments specific to the sector.

One potential driver of renewed interest is the forthcoming launch of options on BlackRock’s spot bitcoin ETF, according to Jake Ostrovskis, a trader at Wintermute, a UK-based crypto firm. Ostrovskis believes these options could open the door for increased U.S. retail investment, particularly following the recent approval of the ETF by the Securities and Exchange Commission (SEC).

However, Youwei Yang, chief economist at BIT Mining, points out that regulators, including the Commodity Futures Trading Commission (CFTC), may also need to sign off on such options, as bitcoin is classified as a commodity. “If successful, the launch of ETF options could elevate the sophistication and volatility of the bitcoin market, spurring greater participation from both institutional and retail investors,” Yang explains.

The crypto space has certainly felt the impact of ETFs, as the excitement surrounding their approval has fueled activity worldwide. As of October 1, 2024, the total cryptocurrency market value has swelled to $2.2 trillion, a staggering rise from $8.3 billion at the start of the year, according to CoinGecko data.

“We’ve seen a notable uptick in institutional onboarding and trading,” Ostrovskis adds, highlighting the increasing demand for crypto platforms and services that resemble traditional financial structures.

Bitcoin’s infamous volatility has calmed somewhat in 2024, with its 90-day volatility dropping to 42%—down from 67% in mid-2020, according to data from Deutsche Bank. Still, market analysts caution that bitcoin remains closely correlated with other cryptocurrencies and is often the first asset to be sold off during periods of uncertainty. For example, bitcoin recently dropped 5% following a spike in geopolitical tensions in the Middle East.

Top Crypto-Adopting Countries

Chainalysis’ Global Adoption Index, which tracks cryptocurrency usage in 151 countries through measures like trading and payments, revealed that global crypto adoption has surpassed levels seen during the 2021 bull market, particularly between the fourth quarter of 2023 and the first quarter of 2024.

Adoption is especially strong in lower-income countries with less developed financial systems. India leads the way in Chainalysis' rankings, followed by Nigeria. Notably, seven of the top 20 countries are emerging markets in Asia, including Indonesia, Vietnam, and the Philippines.