Ordinals were one of the hottest new additions to the cryptocurrency space in 2023, replacing NFTs in the minds and hearts of investors from all over the world. Although the Ordinals use pretty much the same technology, their novelty made them interesting. The hype surrounding them reignited interest in the market after the very difficult days of 2022. Many investors have started looking for how to buy Bitcoin again, and grow their portfolios before the arrival of the bullish market.
But it seems that some of the hype is already melting away.
January dip
During January 2024, Ordinals took quite a fall, with sales dipping 61%. This is despite the continuous interest in Bitcoin following the approval of ETFs on January 10th. While investors were expecting this official announcement and approval of this project that had been pending for a decade to create the momentum to allow the prices to climb to considerable points, it seems that the optimism was slightly exaggerated.
In January, sales went from $868 million to $335 million in one fell swoop. Considering that December saw the highest sales in the entire history of the Ordinals, the fall is even more noteworthy. So, what is the reason for the decline? Analysts believe that the oversaturation of the market plays a significant role. Investors have also moved towards holding onto currencies instead of following the latest trends due to the insecurity markets brought over the past couple of years. Nobody is willing to risk their funds anymore.
The launch of the Ordinals was controversial among members of the BTC community from the very beginning. Some likened the tokens to spam email and claimed that it would ruin the blockchain. Ever since its early days, digital gold was never focused on these products, unlike altcoins. It remained dedicated to the original purpose of buying, selling and trading crypto. The rise of the Ordinals made many investors lose their trust in the system’s legitimacy, so it’s no surprise that after the initial hype mellowed, so did the sales.
The halving
With April approaching, investors are thinking about the halving. Those that are focused on Bitcoin have set their eyes on the event for months because of its ability to drive prices up like nothing else. Can it bring back interest in the Ordinals market as well? The short answer is yes. The reduced BTC supply will also drive Satoshi scarcity rates up. That will make the assets more appealing as they become akin to collectibles.
It is also possible that transaction fees will increase as well, and this will serve to incentivize miners to process transactions in higher numbers and provide a more secure network. Further innovation throughout the year can also drive up engagement rates, and the rise of BRC-20 will expand use cases for the network.
Price increase
While the ETFs didn’t bring the growth they were expected to, growth continued. During the last days of January, there was a rebound of 11% during the span of a little over a week. The growth caught many investors by surprise, as they predicted further losses up to lower support levels, around the $35,000 level at the least. This would have been due to a volatility breakout, and the prices should have gone downward.
But in a move that surprised everybody and showed the world that Bitcoin remains quite unpredictable, the exact opposite happened. Many researchers believe prices remained relatively flat because of the outflows from Grayscale’s spot ETF. Another reason might be the fact that clients will finally begin receiving their coins from the Mt. Gox exchange, which ceased operations entirely in 2014 in the aftermath of revelations that it had either stolen or lost hundreds of millions worth of coins.
The complicated macroeconomic situation that deals with inflation played a role, too. Some investors and researchers also believe that whales hold more accurate predictions about price changes, so they have the upper hand over others in the marketplace.
Scarcity
Bitcoin hasn’t earned the title of digital gold for nothing. It is by far the most popular and valuable cryptocurrency in the world, with a market cap far exceeding that of any altcoin. While there have been discussions about one of them ultimately stealing the throne and replacing Bitcoin, none has been able to so far, and it’s virtually impossible to picture any altcoin achieving this status in the near future.
The following halving in April will make Bitcoin scarcer than gold, and many have been debating the effect this will have on the price. While growth is a given, it will take a while until it becomes a practical thing. It typically takes between six and twelve months for it to show, so the elevated prices will only arrive in 2025. But how much bigger will Bitcoin be by that point? Most of the predictions have so far been around $100,000.
This will be considerably higher than the 2021 levels of $69,000, which remains the all-time high of Bitcoin. Real estate is another asset that Bitcoin has been compared to, and, following the halving, it will be scarcer than it as well. As a result, some investors have started discussing how Bitcoin might achieve $500,000 and make history in the investment world. But that doesn’t mean that the market capitalization will be different.
Most analysts believe that Bitcoin will remain below gold in this area. At the moment, Bitcoin is below $1 trillion, while gold is a little less than $10 trillion. The price fluctuations remain a concerning point among investors, but there are many who believe that, following the next halving, the values might never drop below $31K. That would become BTC’s absolute floor, and it will never get lower than that ever again in the market.
This is undoubtedly good news for the investors who would prefer to have a little more predictability in the ecosystem to know what to expect and the best way to continue driving growth. If you’re an investor as well, make sure to keep your eyes out for the changes, as they could be crucial for your portfolio.
