March 2024 Crypto Market Forecast

Bitcoin (BTC) and other top cryptocurrencies have followed up a lackluster January with big gains. Top cryptos are surging to new multi-year highs as the recent launch of the first spot bitcoin ETFs has pushed bitcoin prices above $60,000 for the first time since 2021.

Investors anticipate that spot bitcoin ETF momentum coupled with bitcoin’s highly anticipated upcoming halving event could drive the crypto to test its all-time intraday high of $68,990.90 in coming weeks.

Ethereum (ETH) prices have also rallied in February, partially on bitcoin’s momentum and partially in anticipation of the network’s Dencun tech upgrade, which is scheduled for March 13. In addition, Ethereum investors are hopeful the U.S. Securities and Exchange Commission could soon approve the first spot Ethereum ETFs.

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February Crypto Market Performance

Bitcoin prices surged in the closing week of February, topping $60,000 and finishing out the month over $61,000, a 42% monthly gain. Ethereum prices gained 45% in February to close out the month at just over $3,300.

Among the 10 largest cryptocurrencies by market capitalization, excluding stablecoins, Ethereum’s big February gain made it the top performer of the month. XRP (XRP) was the worst performer with a 12% gain.

The bullish 2023 crypto market momentum has carried over into 2024 so far with bitcoin, Ethereum and other leading cryptos trading at new 52-week highs. Following February’s gains, bitcoin prices are up 45% overall year-to-date, while Ethereum prices are up 47%.

Spot Bitcoin ETF Momentum

The biggest crypto market story of 2024 so far came on January 10 when the the SEC approved 11 spot bitcoin ETFs after years of repeated rejections.

Trading volumes in the three most popular spot bitcoin ETFs, the Grayscale Bitcoin Trust (GBTC), the Fidelity Wise Origin Bitcoin Fund (FBTC) and the iShares Bitcoin Trust (IBIT), surged as bitcoin prices broke out to new 52-week highs in February. On February 27, IBIT registered record inflows of $520.2 million and record daily trading volume of $1.36 billion.

Joel Kruger, FX strategy consultant at LMAX Group, says inflows in the first spot bitcoin ETFs in February were impressive and important.

“This sends a message that there is plenty of interest from traditional market participants. We expect that interest will only continue to grow as the ETF providers build up their education materials and promotion efforts,” Kruger says.

What About Spot Bitcoin ETF Options?

Crypto investors are also awaiting approval of the first options contracts on the new spot bitcoin ETFs, a process experts say could take months.

In fact, the approval process of spot bitcoin ETF options may be delayed because it’s unclear which regulatory bodies are responsible for oversight and policing the new class of derivative contracts.

Ethereum’s Dencun Upgrade

Looking ahead to March, crypto market attention could shift from bitcoin to Ethereum as the world’s second most valuable crypto network implements its Dencun upgrade, also known as Duncan or EIP-4844.

The Ethereum blockchain is currently the world’s leading smart contract platform, but Ethereum is facing intense competition from Solana (SOL), Avalanche (AVAX) and others. Critics of the network point out Ethereum’s relatively slow transaction speed, low throughput and high costs for users. For example, Grayscale reports recent average Ethereum transaction fees of $2.30 are “significantly more expensive” than Solana.

Ethereum already completed its first major step in its long-term plan to reduce costs and improve scalability when it transitioned from an energy-intensive proof-of-work model to a proof-of-stake model in 2023. The Dencun upgrade, scheduled for March 13, will further improve scalability by making network data storage more efficient.

Jesper Mathias Nielsen, chief operating officer at Northstake, says the Dencun upgrade could reduce Ethereum’s settlement costs by an order of magnitude or more.

“Previous Ethereum upgrades tended to solve narrow problems—things like reducing gas price volatility. But EIP-4844 could take Ethereum to the next level by fundamentally improving its scaling and efficiency through vastly lower settlement fees,” Nielsen says.

Are Spot Ethereum ETFs Coming?

Ethereum investors could get more good news in coming months if the SEC approves the first class of spot Ethereum ETFs. At least 10 firms have applied to launch spot Ethereum ETFs, including Fidelity Investments and BlackRock (BLK). The SEC is facing a May deadline to rule on the first batch of spot Ethereum ETF applications.

Ethereum is the only cryptocurrency other than bitcoin whose futures contracts are traded on the Chicago Mercantile Exchange (CME), which is regulated by the Commodity Futures Trading Commission.

Ethereum investors are optimistic the SEC approval of spot bitcoin ETFs means approval of spot Ethereum ETFs is only a matter of time.

Still, it may take more time than many crypto investors hope. The SEC approved the first wave of bitcoin futures ETFs in October 2021, but it didn’t approve the first batch of Ethereum futures ETFs until roughly two years later.

Interest Rate Outlook

The crypto market has seen positive catalysts in 2024. But a healthy macroeconomic environment could be critical to maintaining the bullish momentum in March and beyond.

Rising interest rates triggered crypto winter in 2022, producing a wave of industry bankruptcies and sending the prices of most popular cryptocurrencies tumbling. While U.S. inflation data has trended lower in the past two years, inflation has been stickier than expected in recent months and interest rates remain at 22-year highs.

The bond market is pricing in a 62.6% chance the Federal Reserve will begin cutting interest rates by June, according to CME Group. But a delay in the Fed pivot to rate cuts could be a headwind for crypto prices and other risk assets.

The minutes from the January Federal Open Market Committee meeting suggest the Fed will not be cutting rates until members have “greater confidence” inflation is receding. FOMC officials noted they need to see more progress in the inflation data, noting the “risks of moving too quickly” on rate cuts.

Crypto’s Other Big Winners

Bitcoin’s big rally has fueled rallies in cryptocurrency-related stocks as well, including crypto exchange Coinbase (COIN) and crypto miners Riot Platforms (RIOT) and Marathon Digital Holdings (MARA).

MicroStrategy (MSTR), the world’s largest corporate bitcoin investor, announced in February it has acquired another 3,000 BTC, bringing its total investment up to 193,000 Bitcoins worth more than $11.6 billion.

Heading into March, MicroStategy’s stock price is up 52% year-to-date and 275% over the past 12 months.

What To Watch in March

Sam Bankman-Fried, the disgraced founder of failed crypto exchange FTX, will be facing up to 110 years in prison when a judge issues his sentence on March 28. In November 2023, Bankman-Fried was found guilty on seven charges related to the exchange’s downfall, including fraud, conspiracy and money laundering.

The next bitcoin halving event is fast approaching, likely in April or May 2024.

Each time 210,000 blocks of transactions are added to the bitcoin blockchain, the network automatically undergoes a halving, during which the reward bitcoin miners receive for validating a block of transactions is cut in half. Bitcoin halvings reduce the supply of new BTC created.

Historically, bitcoin prices have bottomed roughly a year before a halving occurs and continue to rally for roughly a year after a halving is completed.

Rikke Staer, CEO of Coinify, says predictions surrounding the bitcoin halving event will likely dominate crypto market headlines in March.

“Previous halvings in 2012 and 2016 were followed by significant price increases for bitcoin, creating a bullish narrative surrounding the 2024 halving,” Staer says.

However, she says the halving is not necessarily good news for everyone.

“Although this is positive for the industry, miners may face profitability challenges, potentially leading to consolidation within the bitcoin mining industry,” Staer says.