The year 2023 was marked by significant global financial trends despite economic challenges. While China struggled despite injecting nearly $1 trillion into its economy, the United States maintained strong employment and growth. Inflation peaked globally but swiftly declined. The crypto market saw an all-time high in institutional interest as forced sellers exhausted their crypto holdings. The U.S. dollar liquidity increased by $3 trillion, highlighting the changing nature of post-2008 monetary policies.
The U.S. government’s ability to sustain substantial deficits, a strategy proven since 2008, continues to stabilize the economy. The post-2008 monetary landscape, defined by increased money supply and irreversible policy changes, was underscored by the U.S. banking crisis in early 2023, which showcased the reliance on cheap money and government interventions to prevent potential collapses.
Entering 2024, optimism from the last quarter of 2023 is expected to continue with a “soft landing” scenario. However, asset prices may experience increased volatility due to balanced inflation and slowing growth, requiring investors to navigate these fluctuations skillfully.
In the crypto sphere, the exhaustion of sellers’ crypto holdings and approvals for spot Bitcoin ETFs have led to the emergence of forced buyers, setting the stage for billions of dollars to flow into the crypto market. Notable trends include the potential approval of Spot Bitcoin and Ethereum ETFs, and the anticipation of other altcoin ETFs by 2025.
Other key trends for 2024 include the expected end or significant slowdown of the Federal Reserve’s Quantitative Tightening program, the readiness of stablecoin liquidity to return to positive territory, and the halving of Bitcoin mining rewards, which is poised to create both supply and demand shocks. Additionally, modest inflation resurgence, advancements in AI technology, and continued economic resilience against recession predictions are anticipated, while China’s ongoing monetary stimulus is expected to focus on production rather than real estate.