On Monday, Hashdex will release our 2024 Crypto Investment Outlook. We’re excited to share the full report with our investors, but are also using this opportunity to reflect on 2023.  

It’s been quite a year for crypto investors. Bitcoin’s investment thesis was tested during a US bank crisis, ongoing economic uncertainty, and geopolitical stress. In each instance, the world’s first cryptocurrency demonstrated its value, giving investors additional proof points supporting its long-term investment case.  

The crypto winter slowly thawed throughout the year and commitments to this asset class from BlackRock and other massive asset managers underscored the acceleration of crypto adoption and acceptance. And crypto has now become more important to the global economy than at any point in its history. In other words, crypto is experiencing a regime shift. 

We continue to believe that the asset class is presenting a generational investment opportunity as more institutions enter the space and network effects lead to exponential growth. This opportunity, we believe, will not linger for long as bitcoin and other crypto assets become more common in institutional portfolios through spot crypto ETFs.  

It’s with this lens that we are looking ahead to 2024. So, to help investors understand the current opportunity, we’ve identified three broad themes for the new year:  

 

1. Crypto enters the ocean of “TradFi.”
   Large investors and corporations are adopting crypto at an enhanced pace, aligning with market conditions for an “institutional phase” as crypto becomes increasingly integrated with traditional financial systems.

 

2. The industry harnesses technological advances.
   The underlying technologies driving the use of major crypto assets continue to develop and advance, helping scale networks and potentially reach billions of new users.

 

3. Crypto benefits from macro tailwinds.
   A spot bitcoin ETF will greatly broaden investors’ acceptance of this asset class and create new product innovation, supported by favorable market conditions, regulatory clarity, and the forthcoming halving. 

 

In our 2024 Outlook our team will share their perspectives on how exactly these themes will take shape in the coming months. As I noted in my previous Notes from the CIO, we believe “the bulls are back in town” and crypto’s winter is fully in the rearview mirror. 

This shift in sentiment is something we’ve been hearing directly from our clients. I spent last week traveling across Europe and was reassured by many of my conversations that this is indeed the case. Investors—many that may have been unable or unwilling to invest in crypto—are now on the verge of making first-time allocations. In particular, what I'm hearing from even the more conservative wealth managers is that the combination of the Bitcoin halving, US ETFs being approved, and improvement in macro conditions is making a strategic allocation to bitcoin impossible to ignore. 

On the second point—the approval of spot ETFs in the US—I think the impact of this is much broader than most people appreciate. There's a significant second-order effect for wealth managers across the world that have in the past viewed crypto as an asset class with too much reputational risk to consider recommending it to clients. My conversations in Europe last week were a sign that when the SEC approves crypto ETFs, this perception of reputational risk will vanish and even the most conservative financial institutions will start considering an allocation.

The current energy and optimism for this asset class is very real, and very different from previous cycles because of the institutional acceptance. For this reason and many others, we are bullish on crypto in 2024 and are excited to continue to provide investors around the world access to this generational investment opportunity in the new year.

 

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