As the year comes to a close, the focus on the approval of spot Bitcoin exchange-traded funds (ETFs) by the US Securities and Exchange Commission (SEC) has intensified. While many predict that ETF approval will lead to a significant price surge for Bitcoin and the broader crypto market, Matrixport, a digital assets financial services platform, offers a unique perspective. In their latest report, Matrixport confidently asserts that Bitcoin and crypto prices are bound to soar in 2024, regardless of the SEC’s decision on ETF approval.
One influential factor identified by Matrixport is the recent declaration of victory against inflation by Jerome Powell, the Chairman of the US Federal Reserve (Fed). Powell’s mention of possible rate cuts has captured the attention of Matrixport. The report highlights that in 2019, when the Fed ended its hiking cycle and kept rates on hold for an extended period, Bitcoin prices surged nearly 300%. Drawing parallels to the present scenario, where the Fed anticipates three cuts in 2024, Matrixport predicts a positive impact on Bitcoin and crypto prices.
Matrixport’s analysis also incorporates their proprietary inflation model, which predicts a sharp decline in inflation from 8% to 3-4% by the end of 2023. This model instills confidence in the platform as it suggests that risk assets, including stocks and cryptocurrencies, will experience a substantial rally in 2023. Moreover, their inflation model indicates the possibility of the US Consumer Price Index (CPI) dipping below 2% by the end of 2024. This prediction has significant implications for Bitcoin, positioning it as a potential hedge against inflation.
In a subdued inflationary environment, investors often seek alternative assets that can preserve their purchasing power and protect against value erosion. Matrixport points out that even if the SEC maintains its disapproval of Bitcoin Spot ETFs in January 2024, higher crypto prices are still expected throughout the year. This suggests that investors understand the value of Bitcoin as a store of value and are willing to invest in it despite regulatory restrictions.
Another factor contributing to Matrixport’s bullish outlook for 2024 is the substantial growth of assets in US money market funds. These funds have doubled since the onset of the COVID-19 pandemic, reaching a staggering $6.1 trillion. With this growth comes an additional $320 billion in interest rate payments per year, potentially leading to an influx of $370 billion annually or roughly $1 billion daily into risk assets like stocks and cryptocurrencies. This surge in capital flowing into the market is expected to fuel the rise in crypto prices.
Bitcoin Halving Cycle and Election Year
Matrixport also takes into account significant events on the horizon for 2024. It marks a Bitcoin halving cycle, a historical phenomenon associated with substantial price increases averaging 192%. Additionally, it is an election year, with the possibility of former President Donald Trump being reelected considered high. Matrixport suggests that Trump’s policies could potentially bolster the US economy, driving up stock prices and cryptocurrencies.
Matrixport’s optimistic perspective on Bitcoin and crypto prices in 2024 challenges the predominant belief that ETF approval is the sole driver of market success. Their analysis focuses on factors such as inflation, rate cuts, investor preferences, and external events that shape the crypto market. While the future remains uncertain, Matrixport’s report provides valuable insights for investors and analysts alike. As of now, Bitcoin is trading at $42,600, showcasing a 1.8% increase in the past 24 hours.
Disclaimer: This article is for educational purposes only and does not represent the opinions of the author. Any investment decisions should be made after conducting thorough research and considering the associated risks.
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