Shock! Binance’s market share may shift to OKX, Justin Sun could be next to pay settlements to regulators, Bitcoin is likely to reach a new ATH, and AI may learn to breach protocols. Such developments in 2024 might have been unexpected, yet these are the forecasts shared with ForkLog by leading experts in the crypto community.
This article explores how legislators might impact the market, the best countries for setting up mining farms, and the potential movements of the most liquid coins.
Market Trends
Anton Toroptsev, Regional Director of CommEX in Russia and CIS:
Several key trends are emerging for 2024. Firstly, the crypto market is expected to grow amid the halving and a reduction in the US key rate. This could be further bolstered by other factors, such as the launch of a Bitcoin ETF, which would attract institutional capital, and ongoing geopolitical tensions, which traditionally benefit safe-haven assets.
The second trend will be the segmentation of the cryptocurrency market. Differences in regulation and approaches will force crypto companies to choose which regions to focus on. Initially, many exchanges aimed at the global market, but it is now clear that working with all countries is not feasible.
Relations between crypto exchanges and the US are particularly challenging. Trading platforms that opt out of working with American users will need to focus on jurisdictions with developing economies, such as Asian countries or the CIS.
The third trend is the growth of decentralized exchanges amid tightening cryptocurrency regulations in the US. User demand for trading platforms less susceptible to regulatory risks will drive their growth. Trading volumes on DEXs could significantly increase by the end of 2024.
Dmitry Machikhin, Founder and CEO of BitOK:
NFTs and GameFi will experience a new growth phase. Non-fungible tokens will become more than just images, evolving into more useful and functional assets. This could lead to new use cases across various industries. Meanwhile, metaverses and gaming projects will become more sophisticated in terms of economics and content quality.
In a growing DEX market, alongside DeFi and NFT projects, stricter regulation will be implemented, including taxation and mandatory anti-money laundering measures.
A key trend will be the integration of artificial intelligence with Web3 technology, already discussed by major corporations and billionaires. Everything is set for explosive growth in AI tokens, potentially becoming the most significant hype in market history.
Andrey Veliky, Co-founder of Allbridge.io:
The adoption of MiCA and legal actions against major global crypto exchanges will lead to liquidity exiting the market, the disappearance of some companies, and a decline in digital asset prices.
I expect some exchanges in jurisdictions with less stringent regulation to be more aggressive in their strategies, including marketing, user acquisition, listing risky assets, and strengthening their market share accordingly.
Mikhail Chobanyan, Founder of Kuna:
MiCA and the Travel Rule are guaranteed. Consequently, the crypto market will see pure banking services, only related to digital assets. Major banks will start opening accounts and servicing clients, drawing liquidity and users away from exchanges.
Sergey Mendeleev, CEO of Indefibank:
Unfortunately, my forecast is bleak. I see a powerful emerging trend towards the erosion of freedom in cryptocurrency by government bodies in many countries, and this trend will only intensify. Without sufficient measures, in five years, a cryptocurrency wallet may be indistinguishable from a bank account in terms of regulatory control.
First, they targeted centralized exchanges, now they are blocking funds at the level of stablecoin issuer smart contracts. The final stage is blocking transactions at the node level. We are heading there, unfortunately, and I see no way out of this rut.
What difference does it make how much Bitcoin will cost if you can’t sell it without paying 35% tax and proving where you got the funds to buy it?
The era of anonymous payments is fading, just like the era of electronic money, which was crushed in the 2000s. I don’t know if solutions like Monero will be found in this area, but for now, it’s all rather grim.
The Bitcoin Market in Russia
Dmitry Machikhin, Founder and CEO of BitOK:
In Russia, new norms and rules for regulating mining and VED can be expected. Specifically, changes in the law “On Counteracting Money Laundering” will aim to tighten monitoring of all digital assets — cryptocurrencies, CFA, and the digital ruble.
Regarding digital financial assets, I believe the situation is unlikely to change next year, and it will remain a corporate tool for various experiments and trials. The mass adoption of the digital ruble is also not expected in the near future. Meanwhile, several new crypto exchanges will appear in Russia, and the exchange market will be more closely monitored and controlled.
There may also be the emergence of stock exchanges like SPB or the Moscow Exchange with combined trading instruments tied to cryptocurrency.
Sergey Mendeleev, CEO of Indefibank:
I expect nothing good from regulation in Russia: it will either be a complete ban or regulation akin to a ban, like with casinos or firearms. We’ve long built all our projects based on this premise.
Yet, BRICS countries could easily seize the agenda and create a free cryptocurrency market with minimal requirements, collecting taxes from mining and turnover instead of following American and European bans, or even getting ahead of the curve. But, alas, just as we missed all the opportunities in 2015-2016, we will miss them again now. Nothing new.
Andrey Tugarin, Founder of GMT Legal:
One of the main directions will be the expanded use of CFA for cross-border payments. This possibility will likely be provided primarily in regulatory acts concerning cryptocurrency turnover.
Among the bills awaiting approval, amendments to the “On CFA” law should be mentioned, which provide for the development of experimental legal regimes in the field of digital innovations. If this concept is abandoned, an alternative model will likely be proposed, allowing payments using cryptocurrency.
The most discussed is the draft law on mining regulation. It prescribes reporting requirements for miners and restrictions on the use of mined coins. It is expected that the document will undergo significant revisions before being considered in the second reading.
It is also important to mention the bill on changes to the Tax Code, which has been discussed for over three years. They propose introducing a reporting system on cryptocurrency ownership and transactions. These amendments have not yet come into force and have not been withdrawn from consideration, so there is a possibility they will be adopted in 2024.
The Bitcoin Market in Ukraine
Andrey Veliky, Co-founder of Allbridge.io:
The prospects for the Ukrainian crypto market, from my point of view, are bleak. The country is actively implementing taxes, blocking the ability to deposit and withdraw funds to cards, and restricting the free movement of digital assets. Not to mention that periodic “raids” on businesses occur “without any rules,” where armed individuals first storm the office, seize money and laptops, and only then must the business prove its legitimacy.
Given that many talented founders have already left, both personally and with entire offices, and even more are “on standby” waiting for the borders to open, I see no reason for their return to significantly harsher conditions compared to before. Again, many crypto community members have already integrated into other countries, learning languages, sending their children to kindergartens and schools, and looking for real estate. Personal safety is also a relevant issue in current realities and does not help choose Ukraine as a place of residence.
Thus, I expect stagnation and decline, as there are significantly more attractive jurisdictions without “mask shows,” with loyal taxation (up to zero), possessing much higher appeal to external investors. In corrupt Ukraine, business is still perceived as a goose to be plucked.
In fact, the Ukrainian crypto community of project founders in the country will consist of “reshufflers,” for whom USDT is just a tool for transferring funds, patriots turning a blind eye to the destruction of their business by the state, and those helping deputies launder money stolen during the war. All this hardly resembles an innovative business.
Kirill Khomyakov, Head of Binance for Central and Eastern Europe and Central Asia:
We see an extremely positive trend in the market — Ukrainians actively use cryptocurrencies for charity, transfers to relatives abroad, investments, and capital movement. The number of Binance users in the country grew by 26% in 2023, globally we consider Ukraine one of the most priority markets.
I note the importance of MiCA adoption for the entire crypto industry and Ukraine in particular. Through these norms, the EU creates a clear regulatory framework for companies that can ensure the protection of crypto investors by adhering to a single set of rules.
Overall, this will increase market efficiency and the use of blockchain innovations.
In addition to already existing conflicting bills, the parliament reported plans to develop a compromise regulation option. Moreover, by the end of the first half of 2024, a new document authored by NBU and NCSSM with the support of the IMF is expected.
We hope that the process of implementing cryptocurrency legislation in Ukraine will be fully completed by the end of 2024.
Expected Investigations in the Crypto Market
Mark Letsiuk, CCO of HAPI:
Binance’s share will decline further due to uncertainty. It’s good that the exchange hasn’t gone bankrupt, but there’s still a trial in February for CZ, and he might have to serve a symbolic one and a half years. Plus, the SEC is getting involved again. I don’t believe Binance will be brought down like FTX — that would be too severe a blow to the industry. But the fact that US oversight will monitor the exchange for five years is certainly unsettling for users.
In my view, Binance’s share might shift to OKX because they have cooperated with anti-money laundering authorities, assisted in investigations, and blocked sanctioned addresses. It seems they foresaw the direction to take.
Who will be the next target for regulators? I think Justin Sun is already negotiating the amount he and his empire will be asked to pay. Considering the HTX hacks, I suspect he’s raising funds for a fine.
Bybit is also under scrutiny. Coinbase has already received a request regarding transactions from this exchange. The question will only be about the amount to be paid. If Binance was charged $4.3 billion, Justin Sun might be asked for $1-2 billion, or they might publicly close Poloniex and leave HTX. Bybit will be charged even less — $0.5 billion, enough for the exchange to continue operating.
Tether and USDT will also be targeted. They’ve been under investigation for a long time because they are as influential a player in the market as Binance. Moreover, over 60% of the network’s transactional activity is related to USDT TRC-20 flows in over-the-counter markets. This stablecoin is often used in gray schemes.
If a major scandal occurs, expect a USDT depeg, and the market share might shift to USDC from Circle.
Anton Toroptsev, Regional Director of CommEX in Russia and CIS:
Major investigations like the Binance case are unlikely, but US pressure on global centralized crypto exchanges will undoubtedly increase, meaning some platforms will have to abandon certain regions or impose specific restrictions on users.
Andrey Veliky, Co-founder of Allbridge.io:
Major investigations and “arrests” will undoubtedly occur worldwide, particularly in the US, as regulators are actively monitoring the market and will seek to bring it under the existing regulatory framework of traditional finance.
Mikhail Chobanyan, Founder of Kuna:
The story with Tether, like with Binance, is not over. We will see cases related to money laundering from several other exchanges. But I think they won’t be able to negotiate as well as CZ and Binance did.
Mining
Roman Nekrasov, Co-founder of ENCRY Foundation:
The top mining countries will remain the same — Russia, Kazakhstan, the US, Canada, and other jurisdictions with relatively cheap electricity.
Mining enterprises are quite conservative, and any relocation involves numerous challenges — from transporting and installing equipment to selecting personnel for maintenance. Thus, miners resort to relocation only in extreme cases, such as a mining ban, as happened in China.
Currently, no radical changes are expected in the top mining countries. However, changes in market shares are possible due to stricter regulations and requirements for enterprises in countries like Kazakhstan or Russia.
Overall, miners are entering 2024 with optimism, as all market participants expect growth ahead of and following the halving, anticipating high returns from investments in both cryptocurrency and mining enterprises.
Aleksey Petrov, Former CIO of The Bitfury Group:
In 2024, a new wave of infrastructure boom and mining growth is highly likely.
I anticipate that the dominance of hash rate in North America will continue to strengthen. As of December 2023, about 35% of capacities were located there. Texas has become a global mining hub.
Several companies, including Iris Energy, Riot, Northern Data, Bitfarms, Core Scientific, Cipher Mining, and Hut 8, have announced plans to expand capacities.
Despite bans, mainland China’s share remains around 20% of the total Bitcoin network hash rate and continues to confidently hold second place in scale.
Kazakhstan, Canada, and Australia collectively represent about 18% of capacities. While Kazakhstan has nearly reached its potential due to state-imposed restrictions, Canada and Australia continue to grow.
Iceland, Ireland, Malaysia, and Germany each currently represent 2-3%. While Germany may reduce mining due to rising energy prices and a limited market, Malaysia and Iceland will continue to expand steadily.
In January-February 2024, the hash rate peak will likely reach 600 EH/s.
Also, in February, we expect deliveries of new miner models from Bitmain, Canaan, and Innosilicon. The release of more efficient devices will inevitably impact older and less efficient companies and farms, gradually pushing them out of the market regardless of electricity costs.
Since new models consume 33–40% less energy and have a hash rate 1.5-2 times higher, this will inevitably have a significant impact on the industry.
Due to the increase in hash rate, the technical complexity of mining pools and the overall organization of business processes will intensify competition and likely lead to the absorption of smaller pools or their bankruptcy.
Undoubtedly, the halving will put pressure on miners and pools. Historically, Bitcoin’s price rises ahead of the halving, but the final economic impact occurs 8–12 months later, when a series of bankruptcies and market exits begin.
Main Cybersecurity Threats
Mark Letsiuk, CCO of HAPI:
Bitcoin has several known vulnerabilities in the Lightning Network, causing a slight outflow of developers, including reputable ones, from Bitcoin Core.
Ordinals and BRC-20 spam Bitcoin, which it wasn’t designed for. They clog the mempool in a bear market, so Bitcoin Core might resort to censorship to sanction the creation of such precedents at the protocol level. Otherwise, in a bull market, this will lead to significant transaction validation delays.
Another issue, though not critical, is that two major mining pools — Foundry and AntPool — already concentrate about 27% of the hash rate each. Together, they control 54% of the Bitcoin network.
For Ethereum, there’s a threat of staking centralization due to Lido Finance, which holds about 32-33% of all coins. To compromise the network, 66-67% is enough. There’s a chance that amid hype projects, Lido’s share will grow, and in a year, they will gain full control over the Ethereum network.
The use of AI tools and modules in fraudulent schemes will increase exponentially. The cybersecurity field is unlikely to keep up. By the end of the year, I wouldn’t rule out a scenario where AI on the side of attackers breaches a protocol built on artificial intelligence, and AI investigates it too.
Superficial audits of smart contracts and DeFi platforms. The analytics company CertiK has a scanner that audits smart contracts for the most well-known vulnerabilities for several thousand dollars. Many projects undergo such superficial checks, which is fraught with increased threats. There are also difficulties with audits in networks not built on EVM.
Vulnerabilities in software code will always exist, many of which hackers find during the testnet phase and exploit after the mainnet launch. Cybercriminals may also automate this process using AI.
Large cross-chains will also be at risk, as they require significant resources to maintain numerous smart contracts, conduct audits, and updates.
We see a threat to Ethereum’s L2 solutions, which mostly represent not tools for network scaling but rather its fragmentation into separate chains, unconnected to each other.
The problem of Telegram bots will persist. This is an entirely centralized solution, vulnerable to hacking. Even if the private key is stored with the user, control over the bot lies with the developer.
User greed plays into the hands of attackers, so phishing sites and fake channels with airdrops requesting wallet access will continue to appear.
Regarding mixers, we expect stricter regulation and the introduction of official reporting. It’s possible that these services may be outlawed altogether.
Bitcoin and Major Altcoin Prices
Vladimir Koen, Trader:
The halving and Bitcoin ETF approval are two time-tested narratives, and in 2024 they will drive crypto market growth. They will be joined by legalization and adoption as a payment method in certain countries. This is crucial — without an influx of new users, rapid growth is followed by a crash. From a low of $727 billion in November 2022, capitalization has grown by 120%.
A 20-30% correction seems reasonable. Globally and economically, these are times of high turbulence. Therefore, accurately predicting market outcomes is unrealistic. It’s always necessary to keep several scenarios in mind.
I anticipate that in early January, the dates for spot Bitcoin ETF approval will be postponed again. We will see Bitcoin below $40,000, ideally $30,000–37,000 in an accumulation phase.
Before the elections in November, additional liquidity will be injected, leading to growth across the crypto market. Ethereum will outpace Bitcoin in growth and will reach a new ATH sooner. With significant inflows in 2024, Bitcoin could reach $80,000–88,000. ETH — $7,000–8,000.
The strongest ecosystems are Solana, Avalanche, Cosmos. LINK, Near, TON, Aptos, ALGO, HBAR, and Axelar have good growth potential.
AI coins will be in demand, and the IoT theme is experiencing a revival. My favorites are FET, IOTA, WLD, Helium, Arkham, Arweave, and ICP. Hopefully, the DEX sector will attract new users and liquidity. Leaders are MKR, GMX, DYDX, UNI, CRV.
The tokenization of real assets is just beginning and also has enormous potential.