With an increase of over 50% in 2024 and an astounding 200% increase since the beginning of 2023, it's safe to say that cryptocurrencies are officially back. The asset class currently has a market capitalization of approximately $2.6 trillion. However, one CEO believes the company still has plenty of room to run.
In a recent interview with CNBC, Ripple CEO Brad Garlinghouse said, XRP (Crypto: XRP) Regarding cryptocurrencies, he pointed out that several macroeconomic factors will converge in 2024, and the entire crypto market could reach $5 trillion, almost doubling from its current price. As sensational as it may seem, he may just be right.
Financial institutions are pouring money into Bitcoin
The biggest reason Garlinghouse believes the crypto market will double in 2024 is related to institutional investor interest. For most of crypto's history, its rise as an asset class has been driven by individual investors like you and me. However, over the past few years, and more specifically through 2024, the long-awaited arrival of deep-pocketed institutional investors has slowly begun to take shape.
In January, the U.S. Securities and Exchange Commission (SEC) approved 11 spot Bitcoin ETFs, effectively giving Wall Street direct access to the cryptocurrency that was previously impossible. After years of pent-up demand, spot ETFs have generated massive volumes in just a few months of trading, putting a serious strain on the market. Bitcoin's (Cryptocurrency: BTC) supply.
In just March, the companies backing these ETFs purchased three times the amount of Bitcoin that was mined during that period. Since its inception, the ETF has had over $12 billion in net inflows, making it one of the most successful groups in ETF history.
As Garlinghouse pointed out, once Bitcoin reaches its fourth halving, this new demand will compete for less supply. This halving, which is expected to occur on April 20th, will reduce Bitcoin's inflation rate from about 1.75% to about 0.8%. “You don't need an economics major to tell you what happens when supply contracts and demand increases,” Garlinghouse said, alluding to the almost inevitable price increase that will occur after the halving.
Here is an example of Point 1 of Garlinghouse's prediction. With some of Wall Street's biggest names in the game, Bitcoin's supply will be subject to additional demand, which should pull other asset classes along as the most valuable cryptocurrency on the market. is.
Possibility of stricter regulation of virtual currencies
Reason 2: With the Spot Bitcoin ETF becoming a huge hit, increased Wall Street interest in cryptocurrencies will force policymakers to enact clear and supportive regulations for cryptocurrencies in the US Garlinghouse thinks so.
While other countries around the world are pursuing more favorable policies toward cryptocurrencies, Garlinghouse said, “The United States remains the world's largest economy and, unfortunately, the most hostile crypto market.” And I think that's going to start to change.” , Also. “
Not only is this an election year that could see several pro-crypto politicians headed to Washington, D.C., but there are also a series of legal battles that could swing in crypto's favor.
If the world's largest economy finally hops on board the crypto train, it will go full steam ahead towards the asset class in 2024, accelerating the market towards Garlinghouse's prediction that cryptocurrencies will double in value in 2024. It should be.
How far will virtual currencies go in 2024?
There is no doubt that the Bitcoin halving and the possibility of more favorable legislation are key catalysts that could help the crypto market reach Garlinghouse's predicted $5 trillion valuation. do not have. But looking back at the past few years of Bitcoin halving, the $5 trillion market cap figure may just be scratching the surface of what's possible.
In 2020, when Bitcoin last experienced its halving, the cryptocurrency market grew five times, from about $200 billion to more than $1 trillion. It then reached its current high of about $3 trillion in 2021.
If this year follows a similar trajectory to 2020, the price target will likely be around $7.5 trillion. That may sound sensational, but keep in mind that this is a cryptocurrency and predictions often underestimate its true potential.
With Wall Street gaining new access to Bitcoin and the possibility of crypto-friendly regulations being introduced, institutional capital will start to trickle in in 2024, making crypto finally legal. This could be the year in which it solidifies its position as an asset class. We don't yet know how bad it will be, but please rest assured. , this cryptocurrency bull cycle is unlike anything we've seen before.
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RJ Fulton has a position in Bitcoin. The Motley Fool has positions in and recommends Bitcoin and XRP. The Motley Fool has a disclosure policy.
Ripple CEO predicts crypto market could reach $5 trillion “Here's Why I Think It's Possible” was originally published by The Motley Fool.
