Bitcoin, also known as digital gold, the most important cryptocurrency and the blueprint on which all other blockchain-based coins are based, has recorded strong performance throughout 2023. After the slump of 2022, during which the prices plummeted and Bitcoin lost roughly 70% of its total value, it was natural that the next movement would be upward. According to Binance, 2024 will continue to be a good year for the marketplace. The recent ETF approval on January 10th and the fact that the next halving is rapidly approaching are all critical factors, as they have already been correlated with growth.
Liquidity
In the cryptocurrency space, liquidity refers to how fast traders can change the digital asset into a fiat currency. It is a fundamental concept and marker for the landscape, and the way values move within it. It impacts volatility directly and leaves its mark on the larger trading activity as well. Just like in the stock market, liquidity is achieved through books. According to recent data, the price action focuses on narrower ranges at the moment after dropping 15% just a few days before.
Bulls are still working towards gaining momentum to get the prices to become more elevated. This has been somewhat underwhelming for traders, many of whom were expecting the market to pick up much more speed by this point. Bull investors are also struggling to bring BTC/USD back to the top, with $48,000 being the ceiling.
Analysts believe the main issue is too much liquidity around the spot price, dampening volatility. According to research, this is precisely why Bitcoin has been trading sideways for a while now, and the value has stagnated around $41.5K and $44K. However, there’s also some bid support between $42,000 and $42,500. This strategy is a type of market manipulation that includes participants making several bids on small amounts, all of which are placed right below the highest bid currently posted by market makers.
Slow reaction
The ETF launch was expected to elicit a robust market reaction, but the overall response was rather underwhelming. There are many theories regarding why this happened. For some, it simply has to do with the fact that the ETFs were so long-anticipated and delayed so many times that when they finally arrived, they failed to generate a lot of hype. Many investors simply lived out their crypto expectations through suppositions and estimations.
Another theory has to do with the VDD, which has reached intense peaks lately, meaning that Bitcoin had to take some time away to cool down. This metric includes the Coin Days Destroyed figures, which use the price to indicate the overall spending velocity. It means there will be a local top that must be surpassed, generally around 1.5. This isn’t a surprise, and many investors were expecting these values, following a consensus reached among many back in July 2023 about the fact that the marketplace is entering a bullish episode.
The attack
The ways in which the cryptocurrency market moves are generally impossible to predict because there are so many fluctuations to account for. To climb, the price must consistently overcome resistance, as there are levels that are more challenging to surpass than others. After the SEC account on X was hacked, and a post was added claiming that the BTC-backed ETFs had been officially approved, crypto prices recorded whipsaw movements, rapid changes that led to abrupt reversals. Generally, these changes are aimless and melt away pretty quickly. They often have no rhythm whatsoever, either.
The hacker attack was later revealed to be a SIM swap type, as the account was revealed not to have enabled two-factor authentication. This kind of scam generally aims for a complete account takeover by targeting two-step verification weaknesses. The intricacies of how the hackers managed to target the account of the Securities and Exchange Commission have not been revealed, but attackers generally use social engineering, phishing emails, and messages or buy information from sellers belonging to organized crime groups.
Penalties
However, just because the ETFs were approved doesn’t mean that the Securities and Exchange Commission has lost its reputation as the Bogeyman of the crypto space. As of January 24th, the New York Southern District Court Judge received several installments that are part of the dispute between tech company Ripple Labs and the SEC. The issue is the company’s financial procedures, especially its institutional sales contracts.
The Commission is requesting permission to view the documents as part of its ongoing effort to devise regulations for the crypto environment. The financial statements in question are the ones from between 2022 and 2023. In late 2020, the agency filed a suit against Ripple Labs, but the company says that its conduct since the filing is irrelevant. The financial condition was also unimportant, as the company said it doesn’t intend to claim that it cannot pay penalties.
Web3
Web3 technology includes blockchain and decentralization by default, being based on the concepts of tokens and crypto economics. The systems will be controlled following communal principles, so nobody is fully in charge and monopolizes all the data. A white paper released on January 23rd reveals plans to put the power back into the hands of the users. Interoperability, privacy, and complete data ownership are essential, but given the continuous trends toward centralization, many investors have become concerned that the blockchain will ultimately lose its initial functions.
Decentralized communications through the means of Web3 platforms could alleviate their worries. Several tools have been designed to accommodate unique communication infrastructure that supports decentralization. The concept of “client-edge blockchain” has managed to absorb all the advantages of the decentralized protocol stacks while also making room for solutions to address their limitations. The digital environment of today needs to be accessible and sturdy, but it’s challenging to have both simultaneously.
The crypto world continues to evolve, fostered by constantly developing and expanding technologies. If you’re a trader, you need to remain vigilant and aware of the ways the environment changes. It’s the only way to ensure your transactions are successful.