Crypto braces for volatility

January of 2024 will go down as a historic, and historically topsy-turvy, time in Bitcoin's history. The start of February promises more upheaval.

"The stage is set for classic volatility," Cointelegraph's William Suberg said.

As of today, at 7:30 a.m. (EST), the largest crypto comfortably straddled $42,200. That’s roughly 3.5% higher than where BTC sat last Monday morning.

It was on the afternoon of Jan. 10 when news broke that the U.S. Securities and Exchange Commission had at long last approved 11 spot BTC exchange-traded fund (ETF) products. BlackRock's BTC fund, IBIT, alone has since topped $2 billion.

Anticipation of this new era coming to pass had already pushed the price of BTC up over the past several months. And while BTC enjoyed a blowout 2023 overall, the chunk gains came in spurts. After briefly flirting with the $30K level in April of 2023, BTC loitered aimlessly until the summer months when the pounding of spot ETF drums began to grow louder.

Since October, when it became clear the SEC was through fighting with Grayscale, the stage was set for BTC to gallop its way above $40K by year's end as mainstream acceptance increasingly seemed in the bag.

Pre-event hype couldn't match actual reality, though. As quickly as the newly birthed vehicles took to the open roads, a contrarian’s dream unfurled; between Jan. 11 and Jan. 23, BTC turned its back on the cusp of $50K and sank below $40K.

Macro events now loom enormously as late January rolls into February. A stubborn crowd of “hodlrs” prepares to contend with Federal Reserve moves that could spark further upheaval, Cointelegraph's Suberg said, referring to the Fed's interest rate decision set for Wednesday.

Economic puzzle pieces will continue to manifest all week long. On Thursday, Feb. 1, some key manufacturing data drops; and on Friday, Feb. 2, there's the release of the January jobs report, alongside a slew of corporate earnings announcements.

With its re-election campaign getting into swing, the Biden administration confronts a world at war, nettlesome inflation and renewed rumblings of U.S. banking system instability exacerbated by a slow-motion commercial real estate crisis.

As The Kobeissi Letter put it: "buckle up for action."

Major coins are nursing losses of 1%-3% on a morning that feels like it could bring any number of surprises in either direction.

The charts are red. Solana, for its part, does boast an impressive green marker on the board as of seven days.

SOL is $96. That's roughly 10% higher than last week at this time. SOL's recent high is about $120 reached on Christmas Day.

If BTC winds up ensnared in some maddening $41K-$49K range in the mid-term, such a quagmire opens the door for a bevy of altcoins to pick up the slack and maybe even go on a run.

SOL, as well as Avalanche, Render and Sui, are coins mentioned in crypto media today as being poised to possibly move higher.

AVAX, similar to SOL, is up nicely (+12%) over seven days but down slightly (-2.8%) over the past 24 hours.

Both networks are steeped in smart contract capabilities and have sights set on encroaching on Ethereum’s turf.  

Speaking of which, ETH has declined 5% in the past week. The sluggish performance came even as the community gears up for an important scalability milestone.

Following successful activations on two remaining testnets, Ethereum's latest upgrade, Dencun, which includes EIP-4844, will be ready to hit the mainnet, with a go-live day slated for the first week of February.

Final deployment, say developers, will mark the dawning of a new era for the smart-contract-centric layer-1 blockchain famously plagued by limited capacity begetting high transaction fees that gum up the works.

An Ethereum Improvement Proposal, or EIP, is a formal document suggesting a specific modification; EIP-4844 introduces a new kind of transaction whereby Ethereum accepts "blobs" of data that exist in a merely temporary state so as to facilitate speedier, off-to-the-side transactions. It's considered a monumental first step toward "sharding," a transformational but ambitious and complicated database management technique to run the network more speedily.

So is full-blown sharding on the Ethereum chain, a Holy-Grail-type quest, finally at hand? Not quite yet.

Early progress will be measured in terms of the anticipated reduction of layer-2 transaction fees, enabling "rollup" solutions to vastly increase capacity, boding well for the Optimism and Arbitrum L2 platforms, while also upping the odds of Ethereum continuing to fend off rivals in the quest for DeFi dominance.