Cryptocurrency CFDs: What to Expect in 2024

Cryptocurrency CFDs: What to Expect in 2024

Reading time: 6 minutes

Cryptocurrencies, or Digital Currencies, were recently thrown back into the limelight, and for good reason. The Crypto market is now worth an eye-bulging US$2.7 trillion, according to CoinMarketCap. This means that the market has nearly tripled in value in just a year.

As most are probably aware, the Cryptocurrency market underwent a substantial change at the beginning of the year, with the approval of 11 new spot Bitcoin (BTC) Exchange-Traded Funds (ETFs), involving many heavyweight institutions, like BlackRock, Fidelity and Invesco. This has helped spark an extensive rally in the price of Bitcoin against major currencies, like the euro (EUR) and US dollar (USD), which recently reached all-time highs. This also filtered through to other major Crypto tokens, such as Ether (ETH), which, behind Bitcoin, is second on the list as the world’s largest Crypto based on market cap. We’ve also witnessed rallies in other smaller Crypto assets, like Binance (BNB), Dogecoin (DOGE) and Shiba Inu (SHIB). 

What to Expect This Year?

Amid greater institutional acceptance and inflows and the upcoming Bitcoin halving event (expected to happen mid-April), along with the Securities and Exchange Commission (SEC) considering spot Ethereum ETH approval in the US (as of writing, the deadline has been extended to the end of May), further outperformance is expected in the Crypto market this year. In addition to this, the US Federal Reserve has projected three rate cuts this year (market implied probability suggests four rate cuts could be seen), which could weigh on the USD and further fuel the rise in riskier assets, like Crypto and equities (you will note that alongside all-time highs in Bitcoin, major US equity indices have equally reached fresh record pinnacles of late).

Donald Trump, former US President and Republican nominee for the 2024 presidential election, was also recently on the wires talking with CNBC about Bitcoin and commented: ‘If you think of it [Bitcoin], it’s an additional form of currency […] it has taken on a life of its own’. When asked whether he was long Bitcoin, he replied no, and made note that he is a ‘traditionalist’ regarding the USD, expressing that he ‘does not want people leaving the dollar’. 

In terms of an analysis of the Crypto market from a technical standpoint, focussing on the price of BTC/USD shows that this market is a momentum strategy and trend-following strategy’s friend at the moment. Based on a series of higher highs and higher lows since bottoming in late 2022, a whisker north of the $15,000 level, investors have been buying into any correction, which has been relatively shallow. With the recent all-time high for BTC/USD, it is forecasted that further buying could be seen, with investors eyeing the next correction/dip-buying opportunity.

Trade Cryptocurrency CFDs with FP Markets

Needless to say, the future looks bright for the Crypto market, but how can traders and investors engage with this market? 

While a number of ways exist to trade and invest in Digital Currencies, the popularity of CFDs has surged in recent years. CFDs represent Contracts for Difference, which allow market participants to participate in the price movement of Digital Currencies without physically taking ownership. There is no need to deal with Crypto exchanges or the hassle of wallets.

In the context of Bitcoin, for example, investing in Bitcoin against the US dollar (BTC/USD) in the form of a CFD product provides leveraged exposure to the major Crypto pair. The same can be said for other digital tokens, such as Ethereum, Dogecoin, Ripple (XRP) and Solana (SOL).

Why Trade Cryptocurrencies with FP Markets? 

  • Traded against the USD, you have access to a wide range of popular Crypto CFDs on MetaTrader 4 (MT4) and MetaTrader 5 (MT5). Unlike many traditional Cryptocurrency exchanges, MT4 and MT5 trading platforms offer a user-friendly interface that boasts a wide selection of trading tools.
  • You can trade Digital Currencies using leverage. The ability to leverage positions allows traders to amplify returns on smaller investments using margin. However, it's crucial to understand the risks involved, as leverage can magnify losses as well.
  • Regulation: Reputable CFD brokers operate under regulatory oversight, offering a layer of security compared to some unregulated Cryptocurrency exchanges.

Looking Ahead

2024 presents exciting opportunities for cryptocurrency CFD traders. The anticipated Bitcoin halving, evolving regulations, continued technological advancements, and the prospect of spot ETH approvals are likely to propel the market forward. Understanding these market dynamics and managing risk effectively can help traders and investors position themselves to navigate the ever-changing crypto landscape in the year ahead.

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