As the final months of the year approach, the anticipation surrounding the approval of spot Bitcoin exchange-traded funds (ETFs) by the US Securities and Exchange Commission (SEC) has generated considerable excitement among analysts and traders. While many stake their hopes on these index funds to fuel a significant price surge for Bitcoin and the broader crypto market, Matrixport, a digital assets financial services platform, offers a distinct perspective. Instead of solely relying on the SEC’s decision on ETF approval, Matrixport firmly believes that Bitcoin and crypto prices are destined to soar in 2024, presenting a fascinating alternative narrative.
One influential factor identified by Matrixport is the recent declaration of victory by Jerome Powell, the Chairman of the US Federal Reserve (Fed), in the institution’s fight against inflation. Powell’s mention of possible rate cuts has caught the attention of the digital asset platform, which notes an intriguing correlation. It points out that Bitcoin prices jumped nearly 300% in 2019 when the Fed ended its hiking cycle and kept rates on hold for an extended period. Drawing parallels to the present scenario, where the Fed projects three cuts in 2024, Matrixport predicts similar positive effects on Bitcoin and crypto prices.
Matrixport’s analysis incorporates a proprietary inflation model presented a year ago, which projected a sharp decline in inflation from 8% to 3-4% by the end of 2023. This inflation model instilled great confidence in the platform, suggesting that risk assets, including stocks and cryptocurrencies, would witness a substantial rally in 2023. Moreover, the 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’s price and its function as a potential hedge against inflation.
In a scenario where the CPI dips below 2%, investors might seek alternative assets such as Bitcoin to preserve their purchasing power and shield themselves from the erosion of value caused by inflation. Bitcoin, with its limited supply and decentralized nature, has often been deemed a potential hedge against inflation. Matrixport emphasizes that even if the SEC maintains its disapproval of Bitcoin Spot ETFs in January 2024, higher crypto prices are still expected throughout the year.
Matrixport’s report highlights the substantial growth of assets in US money market funds, which have doubled since the onset of the COVID-19 pandemic, reaching a staggering $6.1 trillion. This growth implies an additional $320 billion in interest rate payments per year, potentially creating a daily influx of approximately $1 billion into risk assets such as stocks and cryptocurrencies. This influx of funds could further drive up prices and contribute to the bullish outlook for Bitcoin and other crypto assets in 2024.
Matrixport’s bullish outlook for 2024 also takes into account significant events on the horizon. The year marks a Bitcoin halving cycle, historically associated with substantial price increases. On average, Bitcoin has experienced a 192% price increase during these cycles. Additionally, 2024 is an election year, and the possibility of former President Donald Trump being reelected is considered high. Matrixport suggests that his policies could potentially bolster the US economy, thereby driving up stock prices and cryptocurrencies.
Matrixport offers a unique perspective on the future of Bitcoin and cryptocurrencies. It emphasizes that the approval of spot Bitcoin ETFs by the SEC may not be the sole determining factor for a significant price surge. With an analysis that incorporates inflation models, rate cuts, potential influx of funds, and upcoming events, Matrixport presents an alternative narrative of a bullish market for Bitcoin and crypto assets in 2024. However, as with any investment, it is crucial to conduct thorough research and exercise caution before making any investment decisions.