Many changes are taking place in the cryptocurrency industry every day — from El Salvador being the first country to adopt Bitcoin as legal tender to China outright banning all cryptocurrency transactions, it can be difficult to keep up with all the changes going on.
Looking forward, what moves are traders likely to see out of the cryptocurrency industry? Here are what some experts seem to think 2024 has in store:
Meme Coins Could Continue to Surge
Meme coins work differently than more traditional cryptocurrencies like Bitcoin and Ethereum. Coins like Dogwifhat and Render trade on internet rumors, memes and speculation more than the underlying value created, but these coins can make massive moves. For example, Render price spiked at the beginning of 2024 from around $3 to over $13 which is a 333% increase in a few months.
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Environmental Impact
According to the World Economic Forum, the carbon emissions produced in the cryptocurrency space have begun to come under scrutiny. Since electricity is required to power the mining rigs and computers that mine cryptocurrencies, some experts say that cryptocurrencies may come under fire from the public for their energy consumption.
According to a University of Cambridge study, cryptocurrency mining accounts for 0.5% of all global electricity consumption; this would mean cryptocurrency mining uses more power in a year than the entire country of Sweden in 2022.
Countries Adopt Crypto as Legal Tender
As some countries like China move to ban cryptocurrencies like Bitcoin or Solana outright, other countries could be taking the opposite approach and becoming a safe haven for crypto holders. The country of El Salvador has begun adopting Bitcoin as legal tender alongside its local currency, and there have been rumors that some states in the US are considering doing the same.
Some concerns have been raised that moving to a strictly digital method of payment could have potential downsides, including technical difficulties and being more stressful to learn and use for less technically-savvy individuals like senior citizens.
The International Monetary Fund has urged caution against moving towards digital currencies, noting Bitcoin’s price volatility and potential risks to “consumer protection, financial integrity, and financial stability.”
Increase in Regulation
According to statements from the Securities and Exchange Commission, there are internal concerns that the growing world of decentralized finance (or DeFi) platforms pose a risk to regular consumers. Among the risks cited include a lack of consumer protection and weak anti-money laundering checks that are standard in traditional financial instruments.
Associate Director of the Centre for Cryptocurrency Research and Engineering, Ying-Ying Hsieh was quoted on weforum.org predicting that investors can expect to see a more well-defined regulatory framework implemented in the cryptocurrency space in the coming years. She also stated that she expects regulators will attempt to “bridge the crypto world with the traditional financial systems.”
Other experts have predicted that regulators will face major difficulties in attempting to integrate cryptocurrency platforms into standard financial compliance frameworks.