The State of Cryptocurrencies in 2024

May 25, 2024 Roberto Magalhães

Talking about crypto in 2024 is very different to how it was in 2023. Does this mean they are doomed to oblivion?

Remember when cryptocurrency used to be the talk of the town? You couldn't go anywhere during the first few months of the COVID-19 pandemic, or even the first half of 2021, without hearing your friends talk about how much they made (or lost) in crypto, how they wish they had gotten into the trend sooner and how NFTs would be the next big thing. But things are very different this year.

As proof of this, let's look at one of the best illustrations of what's trending in Western society: Super Bowl ads. In 2021, crypto companies spent a total of $39 million buying seats at the Super Bowl. The following year, there was not a single crypto announcement in sight.

Why is that? The crypto industry has fallen on hard times in the months since last year's Super Bowl. Celsius Network, a cryptocurrency lending company, announced , “Due to extreme market conditions, today we announce that Celsius is pausing all withdrawals, swaps, and inter-account transfers” before shutting down mid-year. At the end of November, FTX, one of the largest cryptocurrency exchange platforms, declared bankruptcy.

Since these two institutions disappeared, the very coins that exist today, 22,000 of them, have suffered a huge blow.

After reaching an all-time high value of around $69,000 per unit on November 10, 2021, Bitcoin (BTC), the best-known cryptocurrency, has since erased around 67% of its value, standing at around $24,150/unit at the time. of this writing.

All other major cryptocurrencies also fell in valuation. Between December 2021 and December 2022, the value of Ether (ETH) fell 65.30%, Cardano (ADA) 75.26%, Binance Coin (BNB) 48.41%, XRP 51.46%, Dogecoin (DOGE ) 52.08%, ChainLink (LINK). /USD) at 62.69%, Litecoin (LTC) at 47.66% and Bitcoin Cash (BCH) at 74.90%.

Since then, some of them have recovered a bit, but overall, as of now, they are below their value at the end of 2021.

The story, however, does not end there. Other supposedly safer forms of cryptography, such as stablecoins, have also taken a major hit.

Stablecoins are a type of digital currency backed by another form of currency, such as the US dollar, or a commodity such as gold. They are designed to be less volatile than other forms of cryptocurrency. The most notable blow was the collapse of the Luna token and its associated TerraUSD stablecoin. Initially traded at a parity of US$1 for 1 TerraUSD (hence the name), it is worth just US$0.022 at the time of writing.

So what happened? We can point out three main factors:

#1 Financial Rollercoaster

“What goes up certainly comes down” is an expression often used in the financial world. This illustrates what happened last year, with major crypto assets suffering massive price drops. This was further compounded by people shorting the market (or shorting), driving cryptocurrency prices to lower lows.

#2 Cryptographic regulations

Cryptocurrency is decentralized, with no central authority governing its use. However, with current exchange hacks and pump-and-dump schemes, government officials are calling for crypto regulations. As a result, many investors are withdrawing their funds from the crypto space to avoid future trading restrictions.

#3 The closure of prominent crypto projects

Many crypto projects looked promising in their early stages and attracted investors to their platforms. However, several of them failed to live up to the enthusiasm when the founders started diverting investors' money into their pockets. This has resulted in the spread of fear, uncertainty and doubt in the crypto community. As a result, many cryptocurrency users dumped their cryptocurrencies on the market.

Is it safe to invest in crypto?

Just as volatility can be both an advantage and a disadvantage for investors, the decentralized nature of crypto can bring risks. If something is decentralized, it is not regulated. The absence of regulation makes investing in an asset class riskier, as market users may seek to exploit the lack of supervision.

This is not the case when investing in stocks and bonds – markets subject to considerable regulation. Such regulations make these markets a safer place to grow wealth, while also allowing investors to rest assured that they will not lose their money to fraud. Although cryptocurrencies are legitimate, the lack of regulation brings with it an uncertainty that traditional assets do not.

Financial guru and billionaire Warren Buffet told Yahoo! Finance that crypto “has no value,” adding that he considers it an unproductive asset. Buffett has a well-known preference for shares in companies whose value – and cash flow – comes from the production of goods. But that's not what cryptography does, according to Buffet.

“They don't reproduce, they can't send you a check, they can't do anything, and what you hope is that someone comes along and pays more money for them later, but then that person is left with the problem,” Buffet continued.

Although Bitcoin's goal is to provide real value as a payment system, its use is still quite limited. In Buffett's opinion, Bitcoin's value comes from the optimistic belief that someone else will be willing to pay more for it in the future than you are paying today. Certainly, that optimism appears to be fading.

So are they dying?

In a word, no. Of course, they are not as ubiquitous as they once were, nor do they inspire the same confidence as they once did. But by all accounts, a single Bitcoin is still worth more than $20,000. If you had purchased $1 worth of Bitcoin at its original price in July 2010 at $0.0008, it would be costing you $30,187,500 at the time of writing. Not bad.

Another area to address in relation to the current crypto and NFT climate is the advent of Web3.0, where we will see the technology adopting other uses. Without a doubt, the development of Blockchain — once an obscure term known only to technology enthusiasts and developers — has become part of our common lexicon, and as we understand it better, different possibilities for how to use it will emerge.

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