2024 could be 'an awesome ride', say Aussie crypto exchange bosses

For crypto, 2023 has been ridden out with ‘remarkable resilience’
2024 is shaping up very nicely, led by two big factors – US spot BTC ETF approval and the Bitcoin halving
Plus, niches and narratives to watch in the crypto sector in the coming 12 months

We asked the heads of Australia’s two oldest crypto exchanges for a recap of the crypto market in 2023, and what could happen in 2024.

Stockhead caught up – separately – with Independent Reserve CEO and co-founder Adrian Przelozny, and BTC Markets’ CEO Caroline Bowler. Here’s what they told us…

‘A remarkable year of resilience’

Compared with the horrors of 2022, 2023 turned out to be a much better year for the crypto industry, especially its last few months. What do you put that down to?

Adrian Przelozny: “On a macro level, the major drivers of the continued growth are new investors coupled with a large pool of seasoned investors that always stayed in the market, the anticipated Bitcoin spot ETF, the approaching Bitcoin halving and growing institutional adoption.

“Softening US inflation data has also helped improve investor sentiment.

“In the past 12 months, we saw the turmoil and collapses caused by FTX, the collapse of Silvergate and Signature Banks – which led to an industry-wide liquidity crunch, regulatory scrutiny and enforcement actions against major industry players.

“While this may have had short-term negative impacts, the crypto industry has been resilient, continued to mature, adapt and as a result grow stronger.”

Caroline Bowler: “While ETF anticipation undoubtedly fuelled part of the crypto rally, 2023 witnessed a perfect storm of factors propelling the industry forward, culminating in a year of remarkable resilience and progress.

“Legal victories, including Ripple’s successful SEC battles and Grayscale’s ETF approval, significantly boosted crypto’s momentum. This confluence culminated in a wave of institutional involvement. BlackRock and Fidelity led the charge through ETF initiatives, while giants like Goldman Sachs are looking to the future with blockchain networks like Canton.

“And we can’t overlook the looming Bitcoin halving in April 2024 as another significant factor. Historically, halvings have sparked significant price and volume fluctuations in the months leading up to the event, as anticipation and speculation build around the reduced supply.

“With these catalysts in place, we can expect further evolution and integration into the global financial system in the years to come.”

‘The market is just waking up’

Do you think we’re truly in the beginning of a bull market here for crypto? The “disbelief” stage, perhaps?

AP: “We’re in ‘crypto spring’, the market is just waking up.”

CB: “We’re likely in a phase where scepticism is giving way to cautious optimism. The market is testing the waters, and Bitcoin’s recent performance is a positive sign. Declaring a bull run hinges on the return of significant institutional capital and regulatory clarity.

“Crypto’s dynamic nature keeps things exciting, as I’ve learned from experience. While the occasional 10-20% correction remains a possibility, recent trends show a market maturing and building resilience.”

‘We’re in for an awesome ride’

Okay then, how bullish are you feeling for Bitcoin and crypto heading into 2024? Just how big do you think a Bitcoin spot ETF approval in the US will be for the market? What sort of effect do you think it could have?

AP: “I’m extremely bullish on Bitcoin and the crypto market, not just for 2024 but 2025 also.

“When you combine the fact that over 93% of all Bitcoins have been mined, coupled with the flood of new institutional and retail investors that will enter the market if Bitcoin spot ETFs are approved, then we’re in for an awesome ride.

“It’s hard to anticipate how big the impact of the Bitcoin spot ETFs will be, but I believe it’s going to be much bigger than anything we’ve seen before.”

CB: “While my natural bias as the CEO of an Australian crypto exchange leans bullish on Bitcoin and crypto in general, I believe a pragmatic approach involves considering all sides and stack probabilities.

“So… the bull case involves:

“Bitcoin ETF approval – A US-approved spot Bitcoin ETF would be a game-changer. It would unlock billions in institutional capital currently sidelined due to regulatory uncertainty. Imagine Wall Street giants finally dipping their toes into the Bitcoin pool – the liquidity boost would be immense, potentially propelling Bitcoin to new highs.

“Continued technological advancements – The blockchain ecosystem isn’t resting on its laurels. Layer 2 scaling solutions, privacy-focused protocols, and innovative DeFi applications are constantly evolving, addressing scalability and security concerns that have plagued the industry. These advancements will attract new users and fuel further adoption.

“Regulatory clarity – While regulatory scrutiny remains, a shift towards a clear and pragmatic framework is emerging. The Australian Treasury is proposing comprehensive regulatory requirements for crypto exchanges, paving the way for a more stable and secure industry locally. This increased regulatory certainty will ease investor anxieties and pave the way for broader institutional participation.”

But hang on, the bearish view…

Nice, but okay then – give us the bearish case, Caroline.

CB: “Macroeconomic headwinds – The global economic slowdown is a major concern. A recession could trigger risk aversion, leading investors to flee risk-on assets like Bitcoin. Additionally, rising interest rates, sticky inflation and increased unemployment could further dampen the crypto market.

“Regulatory crackdown –While some progress is being made, regulatory hurdles persist. The SEC’s recent stagnation on several Bitcoin ETFs is a stark reminder that the path to approval is still fraught with challenges. Stringent regulations could stifle innovation and limit market growth.

“Technological challenges – Blockchain technology is still in its early stages, and scaling remains a significant obstacle. If solutions like Layer 2 fail to gain traction, transaction fees could remain high, hindering mainstream adoption and user experience.”

And Adrian? Crypto market headwinds? What if SEC boss Gary Gensler denies us all a US spot BTC ETF yet again? He wouldn’t pull the rug on us this time with BlackRock chomping at his heels… would he?

AP: “The SEC has kicked Bitcoin ETF can down the road many times before, and it wouldn’t surprise me if they choose to do so again. However, I do believe that it will be approved in 2024. Whether this happens before or after the Bitcoin halving, time will tell.”

Niches and narratives to watch in 2024

Are there any crypto narratives/niches/sub-sectors you feel particularly positive about for 2024?

AP: “The crypto sector is continuing its maturation, and we’re going to see strong growth and evolution in DeFi, Web3, DAOs, NFTs, play-to-earn blockchain games, Layer 2 and scaling solutions.

“All these sectors are going to continue to grow in parallel.”

CB: “In 2023, the spotlight was clearly on Artificial Intelligence (AI), marking it as a formidable force that significantly influenced both traditional finance (tradfi) and the blockchain sector. This influence is evident in decentralised AI computing power markets, where projects are pioneering the development of autonomous AI software.

“Other narratives gaining traction throughout the year are real-world asset tokenisation (RWA), which fosters accessibility to physical assets via the blockchain.

“Then there are Decentralized Physical Infrastructure Networks (DePINs) that decentralise infrastructure control. And restaking protocols like Lido or RocketPool, which introduces novel yield farming strategies.

“And finally, big data projects that ensures scalability of blockchain projects.”

‘Web3 gaming could see explosive growth’

Are there any slightly ‘out there’ predictions you want to go out on a limb with? Eg. is web3 gaming set to eat traditional gaming? Will NFTs make a massive comeback and be as big or bigger than ever?

AP: “Web3 gaming could experience explosive growth that exceeds the player base of traditional gaming giants like Steam or PlayStation.

“Just as cryptocurrency exchanges and DeFi platforms have become more sophisticated, easier to use and capture more users than their TradFi counterparts – web3 gaming could eventually see the same thing.

“I could envision web3 games evolving to have better gameplay and capture traditional gamers. This could come in the form of play-to-earn, decentralised community ownership, interoperable assets and traditional gaming giants embracing web3. They just need to make sure the games are also made to stick because of a great user experience.

“NFTs aren’t going anywhere. Art is pervasive. Beyond the artistic nature of NFTs, the role they play in events, communities, games and beyond continues to evolve. Moreover, NFTs are accessible. You’re not constrained by geography or wealth. If you have an internet connection and a crypto wallet, you can enjoy and buy NFTs from all around the world.”

Crypto capital could flow to Australia

Likewise, Caroline – what other 2024 predictions do you see potentially happening? Anything a bit left field?

CB: “A significant repatriation of capital to Australia could take place as investors, prioritising stability, and regulatory clarity, reassess their holdings in exchanges perceived as less stable, such as FTX and Binance.

“As regulatory frameworks in some jurisdictions become more stringent, investors might prioritise platforms operating under clearer regulatory environments. Australia, with its efforts to provide a structured framework for the crypto industry, could attract capital inflows.

“The perceived stability and investor protection offered by regulated exchanges on Australian soil may become increasingly attractive, leading to a repatriation of funds.”

Australia’s regulatory scene – where we at?

Where does the land lie in Australia regarding the regulatory aspect for crypto? Is there a light at the end of the tunnel on regulatory clarity? Or is the government still just taking too damn long?

CB: “The Treasury’s [recent] proposal marks a significant stride in bringing clarity to Australia’s crypto ecosystem. While it promises a positive move towards regulation, certain hurdles remain.

“Addressing concerns such as mandatory onshore custody and adapting the Net Tangible Assets (NTA) requirements to crypto’s unique realities is vital for fair regulation. The proposal recognises the importance of regulation in safeguarding consumers, fostering innovation, and aligning internationally.

“However, concerns arise about burdensome recovery requirements for user errors across networks and the absence of mandatory onshore custody, potentially leaving assets exposed to overseas issues.

“The proposed NTA requirement, based on traditional models, may not suit crypto’s dynamic nature, posing burdens and hindering innovation.

“Also, insufficient attention to professional advice leaves investors exposed to misinformation and limits the contribution of financial advisors.”

AP: “Naturally, we would like to have seen crypto regulation implemented sooner, rather than later. That said, the government, as it should, is taking consultative, thorough and sensible steps when it comes to crypto regulation.

“I anticipate that once the regulation rolls out, the local cryptocurrency and blockchain sector will be stronger. It will be aimed at ensuring that the businesses and crypto exchanges that remain operating, do so to the highest standards. This would result in increased consumer confidence, as well as greater operational clarity for businesses and therefore overall greater stability.

“Crypto regulation and exchanges requiring an AFSL (Australian Financial Services License) is likely to be about a year or two away. I’m very excited about it and looking forward to its implementation.

“We’re not the only ones hoping for a speedy implementation of crypto regulation. In a survey we conducted in December of 2,000 everyday Australians, 40% said they wanted the Australian Government to implement a licensing regime for crypto exchanges.”

Sell us 2024 a bit more, exchange bosses

What’s in store for for BTC Markets in 2024? Tell me why it’s going to be a good year for your lot, Caroline?

CB: “In 2024, BTC Markets anticipates a momentous year marked by international expansion, innovative developments, a steadfast commitment to client protection, community engagement initiatives, and the strength of an unbeatable team.

“While specific offshore plans can’t be disclosed, the expansion into new markets underscores a dedication to growth and establishes BTC Markets as a global leader in the digital asset space.

“Our focus on innovation is unwavering, with the team pushing boundaries to enhance user experiences and maintain our pioneering position in the industry.

“Prioritising client safety remains paramount, with heightened security measures and ongoing adherence to robust regulatory compliance.

“Additionally, initiatives fostering community engagement, education, and support are on the horizon. The exceptional team at BTC Markets, driven by dedication and expertise, is poised to achieve remarkable milestones in 2024, making it a year of significant growth and innovation for the platform.”

And Independent Reserve, Adrian? Sell us 2024 for IR…

AP: “Continued growth right across the business. Everything is growing, from retail to institutional and sophisticated investors to business and community partnerships. We’re hiring more staff, and I anticipate we will keep on hiring right into 2025 to keep pace with the upcoming bull market.

“And Independent Reserve Singapore is seeing continued record growth in both trading volume and customer acquisition – institutional and retail. Our retail brand, bitcoin.com.au, is also going from strength to strength.

“On the product side, we’re constantly improving our operations, offering and functionality.

“Overall, my aim is to ensure we’re providing customers with cutting-edge tools and the highest possible level of service they would expect from a cryptocurrency exchange as we move into the bull market.”