Bitcoin hit its highest level in nearly 21 months at over $45,800 as the ongoing crypto rally continues into 2024. A new report suggests that the flagship asset is poised for further gains in the coming weeks, with several catalysts at play.
Matrixport's latest analysis points to the possible approval of a spot Bitcoin ETF sometime this week, contradicting the expectations of most traders who expect a positive announcement on January 8th, 9th or 10th had.
If this scenario occurs, the crypto financial services platform expects Bitcoin prices to rise significantly. Unlike the typical sell-the-news response, approval would establish Bitcoin as a legitimate asset class for institutional portfolios and potentially serve as collateral for the acquisition of other assets.
Instead, the risk is on the upside, as the report highlights that $5 billion to $10 billion worth of fiat money may struggle to find enough Bitcoin on exchanges for exposure to ETFs. Following the 2022 bankruptcies and FTX crypto exchange implosions, many Bitcoin holders have removed their BTC from exchanges and the popularity of cold storage options has increased.
The price of Bitcoin could surprise everyone
In addition to the great excitement surrounding the biggest news event of the year, Bitcoin is also anticipating its halving, which is expected in April 2024. Matrixport said this could trigger a price move that could “surprise everyone” this year.
The company explained the tendency of Bitcoin mining companies to restrict supply during halving cycles, which led to a tightening of supply. This phenomenon is occasionally observed in commodity markets when a participant is forced to buy but sellers refuse to sell at the prevailing price level. The result is a significant price increase.
Matrixport noted that Bitcoin tends to rise sharply during halving cycles that coincide with the US election cycle.
Based on previous data, the average return for Bitcoin in 2020, 2016 and 2012 was an impressive 192%. This historical trend could potentially push the crypto asset towards Matrixport’s previous target of $125,000.
The report drew a parallel with US stocks, noting a similar pattern of strength during election years in the US. Notably, since 1960, there have only been two bad years for U.S. stocks during election cycles – 2008, when they experienced a 37% decline, and 2000, when they experienced a 9.1% decline over 60 years. This historical analysis suggests a possible convergence of bullish trends in both the crypto and traditional stock markets during certain election years.
Bitcoin over $50,000 by January 2024
There hasn't been much increasing minting activity on Tether, indicating a lack of significant fiat-to-crypto inflows. Still, the continued price rise could indicate a lack of sellers in the market, which would put upward pressure on prices. Currently, the morning funding rate has reached a new high of +66%, meaning long positions are paying short positions an annual rate of 66% to stay open.
Therefore, the futures market is immediately applying pressure, creating conditions that could push Bitcoin past the January 2024 target level of $50,000, a goal that seems somewhat achievable.
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