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Will Bitcoin’s Rally Fuel a New Bull Run?

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Bitcoin Bull run 2024

Bitcoin is currently sitting at $34.80k after cruising through the $30k mark on the 22nd of October. The sudden price rally was fueled by speculation that Blackrock’s spot Bitcoin ETF would be approved. Traders expect the ETF to result in millions of people around the world allocating capital to Bitcoin. As it’s a spot ETF, this means that Blackrock would be forced to buy the underlying Bitcoin to ensure the ETF is backed by real Bitcoin.

It’s important to note that the ETF has not been approved yet, and at the moment, it’s all rumors. However, it does look like, eventually, a spot Bitcoin ETF will be approved. But we may be in the buy-the-rumor sell-the-news moment as high interest rates and global conflicts are definitely preventing a new bull run. Even though Bitcoin maximalists have been preaching that Bitcoin is the perfect hedge against conflicts and inflation, so far, the general public has not taken up this advice.

Bitcoin’s Trading Volume Is Sending Mixed Signals

While Bitcoin’s trading volume picked up during the recent rally, it’s still incredibly low. Back in August 2023, Bitcoin’s trading volume fell to just 112,317 BTC, which is the lowest level since way back in 2018. 

Bitcoin rallies based on low volume are unsustainable and often the result of a few large players manipulating the market. If Bitcoin is really going to reverse trends, then its price needs to push higher with an organic increase in volume. Otherwise, it looks like whales are colluding to push the price higher, which is frequently the case.

Bitcoin is one of the most manipulated markets in the world. The recent Bitcoin appears to be traders trying to front-run each other to get ahead of the ETF news rather than an influx of new investors. Don’t be surprised if we get a sell-the-news moment once the ETF is announced as traders look to take profit and there aren’t enough buyers to take their positions.

There Are Two Distinct Views on Bitcoin

One reason for Bitcoin’s success is that it has been pitched as a solution to everything. At first, it was a cheap way to send money around the world, then it was a way to operate outside the traditional financial system, and now, as the world is increasingly looking dangerous, Bitcoin is being floated as a hedge against chaos and inflation.

While these Bitcoin narratives are largely for public consumption, traders are being forced to pick a side. Bears are convinced that Bitcoin is a speculative asset that is heavily manipulated and has benefited from historically low interest rates and the public’s desire for risk and get-rich-quick investments. They argue that the world has changed, with interest rates not going lower for the foreseeable future and with conflicts popping up over the globe, investors will look for safety.

On the flip, Bulls argue that Bitcoin is a hedge against out-of-control inflation and money printing. They’re convinced that when fiat currencies continue to collapse, Bitcoin offers a safe refuge due to its deflationary properties.

Famed trader Nassim Taleb doesn’t see Bitcoin as a hedge against inflation at all. He says there is no connection between the two and that Bitcoin’s artificial scarcity is meaningless as there are lots of things in the world that are scarce and, at the same time, worthless, such as pebbles from Kastellorizo.

Whether Bitcoin’s rally is a bull or bear trap depends on which view is correct. But from our point of view, it looks like if interest rates stay high and people shift away from risk-on assets, then Bitcoin’s price will likely collapse.

Bitcoin’s volatility and lack of income-generating properties don’t make it a suitable investment in a high-interest rate environment. Instead of putting a large percentage of your portfolio into crypto and waking up in a panic every night, you can simply purchase US treasuries and earn a risk-free 5% +. In times of uncertainty, never underestimate the power of sleeping peacefully!

If interest rates come down and the stock market makes a new all-time, then it’s time to take another look at Bitcoin. This is the true sign that a new bull cycle is underway. Until then, don’t expect Bitcoin to save you from inflation or the fallout from the war in Ukraine or Gaza.

As an avid enthusiast of technological innovation and the thrilling intersection of machinery and athleticism, I proudly consider myself a steadfast supporter of Machina Sports, advocating for its growth, celebrating its pioneers, and contributing to the vibrant community that shares a passion for the future of sports.

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Bitcoin

How High Can Bitcoin Go?

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Bitcoin Breaking Into Binary Data

Buoyed by strong stock market action, bitcoin set a new all-time high of $73,794 on Thursday 14th March. Bitcoin has been having a terrific year, up over 200% since one year ago. With bitcoin rallying, the whole crypto market is enthusiastic about the potential bull run, which could push prices to stratospheric levels. 

Why Is Bitcoin’s Price Surging?

Bitcoin reached just $16,452 in November 2022 due to the fallout of the FTX collapse, which spread throughout the crypto industry. During this period, stocks were also in free fall as investors rushed to safety. However, the stock market, particularly tech, bounced back, and so did bitcoin, which has now been appreciating for 14 months.

As the S&P 500 made a new all-time high, bitcoin followed shortly after finally crossing the $68,000 mark before topping out at $73,794. The increasing price is caused by a combination of factors.

In 2022, the Federal Reserve mercilessly raised interest rates 11 times in a bid to curb inflation. In response, investors pulled their money from riskier assets like stocks and crypto and plowed it into bonds which were yielding stock-like returns. However, following the crypto and stock crash suddenly valuations were looking enticing again.

It also helped that the Federal Reserve paused interest increases and even started signaling that rate cuts were on the horizon. In response, the stock market came roaring back to life, with the S&P 500 posting a 26.3% gain in 2023. The stock market and the crypto market tend to be correlated. They both typically rise and fall together. Due to bitcoin’s greater risk profile, the increases and decreases tend to be more extreme than the stock market.

With the stock market booming, this was a signal to crypto traders to start hitting the buy button. Victoria Bills, chief investment strategist at Banrion Capital Management, said, “People want to capitalize on their ability to diversify.”

Bitcoin ETF Approval is Very Bullish

Another big bitcoin market mover is the recent spot ETFs, Bitcoin ETFs were approved in early 2024 by the Securities & Exchange Commission (SEC). Now, everyone with a brokerage account can hit a button and purchase bitcoin. You no longer have to sign up to a special exchange and worry about your bank blocking your transaction or about how to securely store your bitcoin.

These spot bitcoin ETFs have solved all of those problems. Also, as these are spot ETFs, the ETF owners are forced to back all purchases with actual bitcoin. For example, if $1 billion flows into a bitcoin ETF, then the ETF has to go out and purchase $1 billion worth of bitcoin, which obviously creates incredible buying pressure on the asset. 

Bitcoin ETFs have been a massive success. Analysts suggested that if bitcoin ETFs reached $5 billion in total assets under management within three months, that would be a significant success. However, less than one month after approval, BlackRock’s spot bitcoin fund alone has $5 billion in AUM. There are now 10+ spot bitcoin ETFs, and they control a combined 192K bitcoins.

Where Does Bitcoin Go From Here?

Bitcoin may take a slight cooling of prices during March. However, analysts expect another price surge in April following halving. During halving, the amount of new bitcoin being produced slows by 50%, and it becomes far more expensive for miners to mint new bitcoins. The theory is that miners will hoard bitcoin until it reaches a price where it’s profitable to sell. With less bitcoin on the market, buyers will have to continue to increase their bids if they want to add BTC to their portfolios.

Digital Asset Strategist at MarketVector Martin Leinweber said, “Bitcoin has a tendency to ‘parabolic advances’ in price and it seems to happen every halving event. This next halving event is April 2024; this, combined with the fundamental shape of new investors flowing into bitcoin ETFs, will once again trigger the parabolic advance — a bull market.”

The bitcoin bull market is only just getting underway. Last halving, it took bitcoin 548 days to reach its cycle peak price of $73,000. With price action moving so fast, it’s possible bitcoin will reach $100,000 by the end of 2024. Anthony Scaramucci, legendary hedge fund investor and owner of SkyBridge founder, sees bitcoin ultimately peaking at $170,000 in mid 2025.

Read More: All You Need to Know About Solana Mobile Chapter 2

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Bitcoin

Bitcoin ETFs Have Been Approved – Now What?

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Bitcoin ETF Approval Illustration

On January 10, 2024, the SEC approved bitcoin exchange-traded funds (ETFs). Listed on US stock exchanges, they’re designed to track the price of bitcoin. The SEC has approved 11 different bitcoin ETF applications, including from BlackRock (BLK.N), Ark Investments/21Shares (ABTC.S), Fidelity and Invesco (IVZ.N).

The speculation about bitcoin ETFs being approved has been a major catalyst for the spike in bitcoin’s price. The cryptocurrency dipped under $17,000 at the end of 2022 before grinding its way up to $26,000 in October 2023. It then went parabolic as it leaked that the SEC would approve ETFs by early 2024: in the wake of that rumor, bitcoin shot past $46,000.

Since the bitcoin ETFs have started trading, its price has cooled but remains above $40,000. It is commonly believed that bitcoin will follow the US stock market and act as a leveraged stock position. However, we could see the cryptocurrency take a few legs down before any further upward movements.

Currently, bitcoin is trading in no man’s land. Some analysts believe there’s not enough buying pressure to cause bitcoin to challenge its previous high of $69,000, saying that even $50,000 looks like a stretch at the moment. We’ve already seen one successful test of $40,000 which Bitcoin responded positively to. However, expect to see this floor tested again: could it hold the second time around?

Key Aspects to Watch When Speculating on Bitcoin’s Future

There are a lot of key events you need to keep an eye on that’ll help de-mystify bitcoin’s future. It’s imperative to track interest rates in China and the US. If interest rates are slashed in both China and the US, it would suggest a bullish outlook for bitcoin and the entire crypto market. That’s because in such a scenario, most experts would expect to see a rapid increase in borrowing and money moving away from risk-free assets into more speculative markets like crypto. 

The US stock market will be a leading indicator, too. It’s hard to imagine bitcoin making a new all-time high while the US stock market is performing poorly. It would be an unusual bet to speculate that bitcoin would rise and stocks decrease.

Another event of note is that bitcoin halving is expected to happen in April 2024. Halving is a process that takes place roughly every four years, and it cuts in half the mining reward for bitcoin. Essentially, it makes it much more expensive to mine bitcoin.

Theoretically, this could increase the price as miners are likely to stockpile bitcoin to sell when it becomes more profitable later. Bitcoin has frequently made an all-time high following halving: after the last halving, bitcoin made a new all-time high seven months later and reached $69,000 one and a half years after it happened. So make sure you keep an eye on how the price is behaving following this monumental bitcoin event. There’ll be a lot of speculators betting on whether or not the 2020 cycle will repeat itself in 2024.

Will Bitcoin Make an All-Time High?

Once the mainstream media starts hyping up the masses on bitcoin and we see interest rates come down, then bitcoin has a great chance of making an all-time high. However, the timeframe in which this could happen is uncertain and we can’t necessarily expect this to occur immediately. After bitcoin’s last halving in May 2020, it took bitcoin seven months to set that new all-time high. If history repeats itself after bitcoin’s next halving, then past events would suggest the cryptocurrency may see the peak of its impact until somewhere around October or November. 

Thanks to ETFs, it’s never been easier to purchase the cryptocurrency. All these new potential buyers who can add crypto to their stock portfolios will likely serve as the liquidity bitcoin needs to set a new all-time high and cross the $100,000 mark. But it’s worth bearing in mind that many of these traders may be copying the trade and following the trend. It’s vital that you pay due attention to the US stock market, the FED, and China’s central bank, to gain your own understanding of the broader landscape before you make trading and investment decisions.

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Bitcoin Bullish Consensus Potential Recipe for Disaster

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Bitcoin Bull vs Bear

Crypto bulls are ecstatic as Bitcoin surged in December 2023 and sailed past the $40,000 mark. The price reached up to $45,000 before shooting down up to 10%. However, the market responded to the pullback to immense strength pushing BTC back close to $47,000.

With Bitcoin displaying such strong price action, it’s no wonder that so many people are taking notice of crypto again. Many are claiming that the crypto market has entered a new bull market and you have everyone and their mother making outlandish predictions, including some saying BTC will be as high as $150,000 by the end of 2024. However, have traders jumped the gun? 

The economy is far from out of the woods yet. Some serious potential risks could cause the entire crypto market to take a tumble. Before we get ahead of ourselves, let’s look at the catalysts behind the massive surge in Bitcoin price.

What’s Driving Bitcoin’s Price Rise?

Bitcoin’s price rise is being driven by three factors: potential interest rate cuts, upcoming Bitcoin halving, and a proposed Bitcoin ETF. Even though MAGA fans loathe to admit it, Biden’s done a decent job managing the economy and navigating the tough geo-political issues and inflation, which was threatening to spiral out of control.

When the term soft landing was first debuted, it was mocked as many predicted that rates would continue to rise in a bid to control inflation. However, inflation’s in check, and U.S. payrolls increased by over 200,000 people in December, which was much better than expected. Due to the improved economic conditions, crypto bulls are predicting interest cuts, which they believe will inspire investors to borrow more and pour some of that debt into crypto markets.

A massive catalyst for the Bitcoin pump is the prospective spot ETF fund which will be required to hold Bitcoin and could attract billions of dollars worth of capital from around the globe. Traders have been front-running the debut of this ETF. Bitcoin bulls are predicting a flood of new investors will start investing in Bitcoin because now they can safely purchase crypto via their standard stock brokerage account.

The final reason behind the price jump is the halving, which is set to take place in April 2024. During halving, Bitcoin becomes twice as hard to mine, which means miners have to expand significantly more electricity to mine new coins, which, in theory, drives up the price. For example, currently, it costs around $10,000 to mine a new Bitcoin, but after halving this price could shoot up to $20,000. As the mining costs soar, this essentially places a floor in Bitcoin’s price, and miners are incentivized to keep the price of Bitcoin above the breakeven price. They do this by stockpiling Bitcoin and even making leverage long trades to keep the price high. 

Bitcoin’s last halving was a catalyst for the crypto’s historic run back in 2021, when it reached the dizzying heights of $64,800. Crypto believers are hoping that this halving will result in a new all-time high.

Reasons to Fade the Bitcoin Rally

While the case for the continued Bitcoin rally is clear, there are a few reasons to doubt what the bulls are selling. There are no guarantees the Fed’s going to cut interest rates, even though currently, the market’s betting on a 0.25% cut in March 2024. However, a bigger reason to worry is that the Fed will stop providing liquidity to the market as they stop unwinding their balance sheet. Once the Fed’s balance sheet is drained, we could see a spike in the cost of borrowing, which could cause a serious downturn in global assets, including bonds, stocks, and, of course, crypto. 

As crypto tends to act like leveraged equity markets, Bitcoin could drop by as much as 40% from the level it will reach in early March. During March, it’s expected that the Fed will stop unwinding its balance sheet, and liquidity in the global financial markets will dry. 

Without cash in the system and the cost of borrowing increasing, there simply won’t be enough funds to drive Bitcoin to new all-time highs. You’ll have to wait until the global financial system goes into meltdown and the Fed swoops back into action by cutting interest rates and printing more money.

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