The cryptocurrency world is inherently a volatile space. Earlier in 2024, Bitcoin and several popular altcoins shot up in value and reached new highs—with the latter convincingly breaching past the AUD $100,000 mark and beyond.
However, as of Q3 2024, cryptocurrency has taken a step back from its initial peak and has found itself positioned snuggly at about five-sixths of its all-time high.
With the world anticipating big changes in the global political landscape, there’s a lot of speculation about what’s to come in the world of cryptocurrency and high finance. The US FED’s move to cut interest rates is also expected to change the trajectory of cryptocurrencies like Bitcoin, at least in the short term.
These global events heavily affect the prices and portfolio of cryptocurrencies for people from other nations, Australians included.
With that said, many micro-sized movements continue to shape the performance of various cryptocurrencies, including the price of the undeniable behemoth, Bitcoin.
This is especially true for Australians, as their high number of adopters as well as their larger average per capita per person means that their financial investments can impact the crypto space quite heavily.
That said, one may wonder: how is the crypto market faring, at least in the Australian context, at the latter end of 2024?
Let’s take a sneak peek at the local crypto market and its implications in the long term.
Gen Z Become Big Players
The Generation Z demographic has been exposed to the crypto world from a young age. Many of them are also becoming old enough to acquire jobs, build savings, and make investments for their future.
With more of this demographic entering the workforce, their collective investment decisions are making more impactful swings in the market.
This holds true in the Australian context, as this young demographic leads the annual crypto adoption race with an 11% increase in crypto ownership over the past year.
This figure is further supported by a survey claiming that 32% of Gen Z Australians hold ownership of cryptocurrencies—which is just 3% behind millennials.
In the broader crypto market, Australians are also the fifth-largest adopters of digital assets. These figures go to show that Australian youth—and younger Aussie adults in general—have a large stake in the market and are still in the space for the long term.
Bitcoin Remains King
While Bitcoin and Ethereum are two of the most popular cryptocurrencies by far, Ethereum is starting to wobble under economic pressure and is undergoing a steady decline.
The same can’t be said with Bitcoin, with some rallies preventing it from going on a steady downhill trajectory.
In fact, Bitcoin adoption has continued to soar throughout the years, with many investors shifting their investments away from altcoins and moving them into the more stable and popular Bitcoin.
Bitcoin’s allure has remained constant throughout the years, with its periodic halving, mining interest, and scarcity playing a role in shaping its demand and perceived value.
Furthermore, Bitcoin’s performance in the market also dictates how other altcoins are performing, making it a large influential factor in how the crypto market moves in general.
Many novices in the crypto space start with Bitcoin, and for good reason. Its relative stability, renown, and position in the market make it an ideal investment choice for conservative investors to dip their feet into the water.
Australians are no different, with many newbies and veterans alike opting to invest in this cryptocurrency by buying shares of it in an Australian Bitcoin exchange.
More Crypto ETFs in Retirement Funds
Cryptocurrency exchange-traded funds have been around since 2022, but there has been a rise in other ETFs being introduced into the Australian Stock Exchange, particularly ones holding Ethereum.
There are many reasons for this move towards crypto inclusivity in the finance space.
For one, the older demographic and people planning for retirement alike are using cryptocurrency to diversify their super funds—allowing their portfolios to grow and reap the gains of the historically upward-trending movements of crypto like Bitcoin.
Secondly, it also allows people to diversify their finances without fully committing to learning about the ins and outs of crypto. This makes it ideal for people too busy to look into constant market movements.
US regulatory bodies have also recently legislated the acceptance of Ethereum to be a part of ETFs, which sparked increased demand for this financial product across the world.
In sum, crypto is starting to become more inclusive and accepted as a financial vehicle. And one of the primary areas where it’s seeing growing acceptance is in ETFs as a retirement investment vehicle.
More Regulations on Crypto
Cryptocurrencies are, by their nature, high-risk assets. This space is shrouded with lots of bad actors and unlicensed bodies due to its anonymous and unregulated nature, making it a space that governments need to prioritise regulating to protect its citizens from financial hardships.
In the Australian context, regulations surrounding cryptocurrency are still evolving, but there are legislations in place that aim to protect citizens from these scams.
One of which is token mapping—a recently introduced exercise that categorises digital assets and makes it easier to define and regulate, considering their broad spectrum of applications. Token mapping makes it easier to legally classify digital assets and products, making it easier to push for proper regulation.
Crypto gains are also taxed under capital gains tax in Australia. This means investors will have to pay a tax obligation amounting to an amount relative to their earnings and how it’s been gained. The Australian Taxation Office (ATO) has pushed for exchanges to keep a detailed history of past user transactions to ensure that consumer earnings are properly recorded.
That said, there’s still a lot of regulatory work that needs to be done for Australians to be truly safe from the grip of unregulated entities in the crypto space.
Currently, relevant Australian government bodies are trying to push crypto exchanges to require an Australian Financial Services Licence (AFSL) to operate, as these institutions can currently run without it.
The establishment of these safeguards would contribute to a safer and more trustworthy crypto space—making the market a more pleasant experience to navigate and conduct transactional activities in.
More Investments in Stable Coins
With the growing acceptance of cryptocurrency in Australia and the broader market, more people are increasing their stake in this type of investment.
That said, considering the volatile nature of the crypto market, many keen investors are attempting to time their investments to get a better return.
In times when the market is down, these investors bring their investments out of their crypto holdings and put them into their funds into stablecoins in the meantime.
Stablecoins are digital assets that are pegged with real-life fiat currency, like the US dollar or gold bars. This provides a stable option for investors to put their money in while still benefiting from being within arm’s length of the crypto space.
Stablecoins are becoming more desirable in the market today as they provide an alternative to making borderless payments without passing through third-party intermediaries.
They’re also a reliable store of value that is easily convertible to cash, making them a nice asset to diversify into when you’re dealing with both crypto and cash transactions.
During market downturns, many people use stablecoins to protect themselves against decreasing crypto value. This use case is the primary reason why stablecoins like USDT and USDC are solidly third and sixth in the global crypto market cap ranking, respectively.
