By all accounts, crypto is at a crossroads. Across markets, the legal and regulatory landscape, and the Web3 startup ecosystem, there’s little disagreement among industry leaders that 2024 could shape up to be one of crypto’s most consequential years yet. Whether those events will finally lift the industry out of winter to new highs, or imperil it, remains another question.
But do not panic, dear reader. While nothing about the future can ever be certain—least of all when it comes to crypto—Decrypt has spoken to analysts across finance, policy, and the NFT space to peek behind the curtain.
Following a look at the potential impact of a spot Bitcoin ETF, here's how crypto and traditional finance could merge in 2024 and beyond.
Heading into the new year, all eyes in crypto are undoubtedly fixed on the prospects of a spot Bitcoin ETF. Hype around the financial product—which would allow traditional investors and entities to gain exposure to Bitcoin without holding any cryptocurrency—blasted BTC to 20-month highs this month, and spread industry-wide hope that the unending crypto winter might finally be vanquished by an influx of traditional capital.
Other analysts, though, hold a more sober view of a spot Bitcoin ETF’s likely impact—and predicting its impact on crypto markets will be more muted.
So, how long will it be before crypto and traditional finance finally become meaningfully interlinked?
Make no mistake: Even if a spot Bitcoin ETF doesn’t rake in a trillion dollars overnight, its creation—likely, in 2024—will nonetheless signal a major, and potentially permanent shift in crypto’s history.
Eric Risley, managing partner of digital assets advisory firm Architect Partners, dubs this shift one from speculation to investment. In a nutshell, Risley believes, crypto is about to grow up.
“It’s a legitimization of the asset class,” Risley told Decrypt. “As soon as you get companies like BlackRock and Fidelity offering this as a common investment option, you change the game.”
While Risley agrees that crypto’s first institutional offerings, if they come in 2024, won’t remake the industry overnight, he does think they will redefine crypto as an asset class in the eyes of a once-skeptical world.
“You've moved it from ‘new cheap thing’ to something that anybody can access using traditional channels,” he said. “That's a big deal.”
Crypto’s transition to adulthood won’t be complete by the end of 2024, Risley believes. He estimates the process, on a global scale, will take somewhere between five and 10 years.
But much is already in motion. Risley points to the October announcement that Depository Trust & Clearing Corp. (DTCC)—a key instrument of Wall Street infrastructure that processes $2.3 quadrillion (2.3 million billion) worth of stocks annually—acquired digital asset infrastructure firm Securrency, signaling the clearinghouse’s commitment to getting ahead of blockchain tech.
“They're about as establishment as it comes, and they're even leaning in,” Risley said. “They know what's coming.”
Crypto Crystal Ball is a series examining the hottest industry topics ahead in 2024. Stay tuned for additional perspectives in the coming days.
Edited by Andrew Hayward