On January 2, 2024, a significant surge in the price of Bitcoin is anticipated, with projections to surpass the $50,000 mark, according to a Matrix on Target report published on December 21, 2023. After a typical consolidation at the end of December, BTC is expected to kick off the year with a strong buying flow.
In contrast to the prevailing pessimism and conservative positioning of the majority in the blockchain community and market participants a year ago, both stocks and cryptocurrencies experienced noteworthy growth. Institutional investors, wary of missing out on potential rallies again, are poised to buy immediately as markets open in 2024, potentially resulting in an early rally that catches many investors off guard.
The possibility of the approval of a Bitcoin Spot ETF could be announced today or tomorrow, ahead of the majority’s expectations for approval on January 8, 9, or 10. If this happens, a significant increase in BTC prices is anticipated. Contrary to the common “sell-the-news” trend, the approval would legitimize BTC as an asset class for institutional portfolios, allowing its use as collateral to acquire other assets.
However, there is an upside risk, as $5-10 billion in fiat currency may not find enough Bitcoins on exchanges to gain exposure to Bitcoin ETFs. This is because, after the bankruptcies of 2022 and the implosions of the FTX cryptocurrency exchange, many BTC holders moved their assets off exchanges, resulting in 70% of circulating BTC remaining “unmoved” over the last twelve months.
What Could be the Benefits of a Bitcoin ETF?
In October 2023, it was estimated that a US-listed Bitcoin ETF could attract inflows of between $24 and $50 billion. This estimate was based on the relationship between the change in Tether’s market capitalization and the potential increase in the price of Bitcoin. These factors kept an optimistic outlook throughout the year, especially after Fed Chair Powell adopted a more dovish stance in October 2023.
The upcoming BTC halving cycle, scheduled for April 2024, could limit the supply, contributing to a potential shortage. Coupled with the lack of sellers willing to sell at current price levels, this could lead to a significant price increase. In this scenario, Bitcoin would follow a historical trend of strong rallies during halving cycles, coinciding with the US electoral cycle. Historically, the years 2020, 2016, and 2012 recorded an average return of +192% for Bitcoin during those periods, potentially propelling the cryptocurrency towards our $125,000 target set in July 2023 based on our “one-year-new-high” indicator.