Bitcoin and Ethereum up. Why 2024 could be the year for the crypto market leaders

It's a good time for the top cryptos. Bitcoin (BTC) has experienced an impressive few months, defying a strengthening US dollar and rising Treasury yields as bulls have driven the leading cryptocurrency to its highest level since late 2021. While there is still a chance of a potential price correction in the near future, the broader upward trend is likely to persist. In fact, analysts are pointing to the Bitcoin blockchain's fourth mining reward halving (scheduled for 19 April this year) as an indicator that BTC prices could revisit and even surpass the record high of $69,000. Meanwhile, Ethereum (ETH) is fast approaching $3,000 after a month-long rally, representing its highest price in almost two years. Let's take a look at what's behind the rise of the leading cryptos.

Bitcoin: pre-halving optimism and favourable macroeconomics

It's not our first rodeo when it comes to the Bitcoin halving. Historically, Bitcoin has tended to bottom out around 12-16 months before the halving and starts to trend upwards both before and after the event. Data from the three previous cycles surrounding halving events shows that prices typically surged by over 30% in the eight weeks leading up to the halving. The next halving event on 19 April will halve the per-block reward from 6.25 BTC to 3.125 BTC, reducing the supply expansion by 50%. With Bitcoin currently trading around $52,000, this historical pattern suggests that prices could approach the record high of $69,000 by or before the halving date. Signals on the trading chart appear to support this positivity. Notably, Bitcoin's 14-day Relative Strength Index (RSI) surpassed 80 for the first time since December, a pattern that is closely associated with imminent gains.

The role of psychology cannot be discounted, either. Conversations in crypto communities on Telegram, Reddit, Discord and other social media networks project a strong bullish sentiment around the topic of April's halving event. Investments in the new spot Bitcoin ETFs are increasing ahead of the halving, which indicates that traditional investors also share this bullish attitude.

Macroeconomic trends in global markets also appear to favour Bitcoin. Broadly speaking, the macroeconomic landscape is more supportive of risk-taking, which typically boosts tech stocks and related innovative or unconventional assets like cryptocurrency. Thanks to the US implementing highly stimulative fiscal policies, top firms like Goldman Sachs are predicting strong global economic growth and a weaker dollar — something that Bitcoin can usually capitalise on.

Ethereum price surge: will other altcoins follow?

Ethereum's recent price action has led many to anticipate an imminent ETH bull market. This could have big implications for altcoins in general, as it would be a strong sign that the market is lifting not just for Bitcoin but for cryptocurrency as a whole.

Optimism around Ethereum is based on the potential approval of an Ether spot ETF in the US and the first bull cycle after 2022's Merge event, making ETH deflationary during periods of high network activity. 

Other factors behind Ethereum's rise include improvements in the Ethereum network fundamentals, such as the Dencun upgrade and mainnet launches for Blast (a scaling solution) and EigenLayer (a restaking platform). Ethereum Improvement Proposal 4844, slated for this year, aims to significantly reduce costs for layer-2 blockchains built around Ethereum. There is an evident shift toward specialisation within the blockchain ecosystem, with major L2 blockchains diversifying into subchains targeting specific use cases. The blockchain industry in 2024 is shaping up to be a landscape rich in healthy competition and innovation, where specialised subchains and development teams vie for dominance in various segments.

Unlike Bitcoin, Ethereum is designed to be functional as a decentralised computing platform, serving as the basis of dApps, decentralised finance (DeFi), non-fungible tokens (NFTs) and various other blockchain projects. Many of the top altcoins follow Ethereum's model, attempting to improve on it in terms of scalability, speed or other factors. Progress on the Ethereum blockchain can also spark interest in similar or related altcoins, such as Solana (SOL), one of Ethereum's main rivals, or Polygon (MATIC), whose chain development kits (CDKs) are crucial to the growth of L2 solutions.

Traders should note that Bitcoin continues to command an overwhelming and enduring market dominance at 51%. A wide-ranging 'altcoin season' is unlikely unless this figure dips, but savvy investors should keep an eye on specialist blockchain projects that are generating hype in the cryptocurrency community to spot the diamonds in the rough before anyone else does.

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Backed by increasing support from institutional investors and a growing interest in spot ETFs, alongside the anticipation surrounding imminent halving events, the crypto market is ripe with opportunities to profit from potential price fluctuations. Looking to ride the wave of cryptocurrency success? Look no further than StormGain, the all-in-one crypto trading and investment platform designed to maximise your gains.

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