Valmar Capital, a digital assets multi-manager multi-strategy platform that brings together a broad array of crypto-strategies and emerging talent, has taken a look ahead to comment on key anticipated developments to watch in 2024.
Valmar Capital, which says its approach is backed by institutional-grade infrastructure, innovative technology, and rigorous risk management processes, claims there are reasons to be optimistic about digital assets.
According to Valmar Capital, several factors contribute “to a positive market outlook and provide opportunities” for alpha generation:
- ETF Has Arrived: The BTC ETF is a game changer for crypto. The ETF approval brings true traditional investment exposure to crypto, elevates its legitimacy, and further pushes it into the mainstream. A truly pivotal moment for the long-term growth of the industry.
- Bitcoin Halving: The Bitcoin halving is projected to occur in April, which will reduce BTC emissions and miner sell pressure by half. Historically, halvings have played a pivotal role in influencing BTC’s price, often leading to increased scarcity and heightened market interest/attention.
- Regulatory Shift: In the United States, the regulatory headwinds are beginning to shift into tailwinds.The aforementioned approval of the BTC ETF (with an ETH ETF likely to follow) should unlock greater regulatory clarity, leading to improved volumes and activity. Globally, the introduction of Markets in Crypto Assets (MiCA) regulation seeks to define a regulatory framework for Europe; via the FCA, the UK is poised to introduce formal regulations in 2024; and the UAE has grown as a global crypto hub thanks to frameworks instituted by Abu Dhabi Global Markets (ADGM) and the Virtual Asset Regulatory Authority (VARA).
In addition to the developments highlighted above, Valmar Capital has shared additional key insights, which are included in a comprehensive blog post.
- Improving Volumes: Market volumes have shown significant improvement towards the end of 2023 and have room to grow from here. While BTC 30D spot ADV has recovered to $22B, it averaged $29B since 2019 and peaked at $70B in 2021.
- Improved Counterparty Risk: The Binance settlement has reduced fears surrounding the largest crypto exchange, and Binance’s influence in the markets continues to wane as volumes slowly flow to other exchanges (such as the CME). Additionally, potential resolution of FTX and Celsius creditor claims should reduce the fear of estate liquidations and create a potential wealth effect when the assets are returned. Meanwhile, several off-exchange settlement solutions, notably Copper’s ClearLoop, have emerged during the bear market. The adoption of these solutions is expected to enhance market structure further.
- Macro: In our opinion, it isn’t a coincidence that BTC broke out of its extended trading range when the 10yr UST topped out. With inflation continuing to moderate, we expect that the 10yr will as well, which is supportive of long-duration assets like technology and digital assets.
As we move into 2024, Valmar Capital believes that there are several key trends that could help the indusry move forward. Here are a few more insights from the firm:
- Adoption: Ultimately this is a technological revolution. More and more traditional firms are starting to come around and see the benefit of tokenization and atomic transactions facilitated by generalized blockchains and smart contracts. What once was mere experimentation is evolving into real world use cases with many large traditional finance institutions piloting tokenization and/or stablecoin projects. As adoption increases, our industry becomes increasingly legitimized, new products and applications are created, and institutional investment continues to flow.
The firm concluded:
“It is crucial to underscore that despite entering a bull market, the persisting volatility and dynamic nature of crypto markets continue to be defining features. This reinforces our preference for a diversified, primarily market-neutral approach. The year 2023 marked a period of pause and subsequent recovery in the crypto market. As we venture into 2024, the crypto landscape appears to hold even greater promise, presenting active strategies with the potential to generate alpha in a more favorable environment.”