How should Filipinos navigate digital currency trends in 2024?

Last year, the Philippines saw a massive surge in digital currency adoption, ranking top six in the world, according to a global report. With 2024 shaping up to be a transformative year for digital assets, and bitcoin in particular, we anticipate more Filipino traders will enter the market.

Yet, as we venture into the new year, it is crucial to step back and approach trading with a dose of realism and strategic foresight.

Before diving into the deep end, Filipino traders must prioritize education. Understanding the core values of digital currency or cryptocurrency is critical. Born out of a mistrust towards major financial institutions and aimed at correcting global financial disparities, cryptocurrency emerged as a beacon of innovation shortly after the 2008 recession.

In the years that followed, many saw it not just as a novel technological advancement but as a genuine opportunity to build wealth. However, investors should never enter the market with the intention of nothing more than making a quick profit. A solid grasp of how global events, from economic shifts to political tensions, can affect the cryptocurrency market is essential, as these factors can sway market sentiment and influence price movements in unpredictable ways.

For instance, bitcoin’s (BTC) value soared above $49,000 after the US Securities and Exchange Commission’s (SEC) historic approval of the first-ever spot bitcoin exchange-traded funds (ETF). It then dipped below $39,000 over the following two weeks, as some investors capitalized on the news to secure profits. Despite this short-term market fluctuation, major investors remain bullish as they view the landmark ETF approval as a clear sign of traditional finance embracing the decentralized world of cryptocurrency.

This optimistic outlook is further bolstered by recent adjustments in US interest rates. The reduction in rates has made borrowing more affordable, encouraging investment in various sectors, including cryptocurrencies.

Adding to the anticipation is the upcoming Bitcoin halving event slated for April. This is when the reward for Bitcoin mining is cut in half. Historically, this event has led to significant increases in BTC price over the following months and years. However, forecasting the market’s response to this upcoming halving remains speculative.

Coin crashes can happen within minutes, driven by global events or sudden shifts in investor sentiment. The immediate impact of such events on the local trading landscape highlights the necessity for Filipino traders to remain agile, informed, and prepared to adapt to a rapidly changing environment.

Exchanges being monitored far more closely

While the Philippines has not established a dedicated legal framework specifically for cryptocurrencies, regulators and lawmakers are tightening the screws every year.

In 2017, the Banko Sentral ng Pilipinas (BSP) recognized virtual currencies as a valid payment method. The central bank issued Circular No. 944, requiring virtual currency exchanges to register and comply with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations.

As the country’s fintech industry progressed in tandem with the rapid advancements in the cryptocurrency sector, the BSP introduced guidelines for Virtual Asset Service Providers (VASPs) in 2021, marking a significant step in establishing a regulatory foundation tailored for digital currency exchanges. The guidelines necessitate that VASPs obtain a license from the BSP before launching their operations, reflecting a concerted effort to align the burgeoning digital currency market with robust regulatory standards.

The “crypto winter” of 2022 and 2023, marked by fraud, overreliance on bad debt, and a slew of bankruptcies, spurred the maturation of the cryptocurrency industry and prompted a regulatory response focused on protecting Filipino investors.

In light of these challenges, the BSP, along with other regulatory bodies, has issued warnings against engaging with unauthorized exchanges such as Binance, underlining the risks associated with platforms operating outside the legal framework established by Philippine authorities. Moreover, the Philippines SEC announced plans to roll out Digital Asset Security Service Provider Rules this year, aiming to establish a detailed legal framework for digital assets, especially those classified as securities.

This year promises a continued flurry of activity from regulators and legislators to improve and build upon the status quo. These could include stricter licensing requirements for new VASPs, enhanced scrutiny of existing platforms, and more rigorous enforcement of compliance standards. The goal of these measures is not to stifle innovation but to ensure that the growth of the cryptocurrency industry is balanced with the need to protect investors and maintain financial stability.

With local regulators like the BSP leading the charge in establishing a secure, transparent, and compliant cryptocurrency ecosystem, the Philippines is poised to become a leading example of how to navigate the complexities of the digital asset space in a manner that benefits investors, innovators, and the broader economy alike.

Perspectives for 2024

As 2024 unfolds, the journey toward sustained success in navigating the cryptocurrency market demands a disciplined, knowledge-driven approach. Engaging with fellow traders and seeking advice from credible industry experts through social media platforms, forums, and local meetups can provide invaluable insights and support. Collaboration and sharing experiences can lead to better-informed trading decisions and strategies. Remember, cryptocurrency trading is not just about individual success but about growing and learning together as part of a broader community.

For Filipino traders, either embarking on or continuing their cryptocurrency journey, staying informed is key. Understanding this ever-evolving landscape, marked by fluctuating market trends, economic shifts, and significant global events, while keeping an eye on the local regulatory climate equips traders with the necessary tools and insights to navigate the complexities of the digital asset space effectively.

The author, also known as Coach Miranda Miner, is the CEO of Global Miranda Miner Group, and the founding chairman of the Innovative Movement of the Philippine Association of Crypto Traders (IMPACT).