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What to expect for Bitcoin in 2024?

Thesis: bullish

As we approach 2024, the outlook for Bitcoin (BTC) appears to be at a crucial turning point. Various fundamental factors could drive its price higher not only in 2024 but also in much of 2025 if the digital currency behaves according to the patterns that have characterized it in the past.

The eyes of the financial world are on Bitcoin, waiting to see how this chapter of its history will unfold. Of course, the future cannot be predicted with certainty, but Examining various indications allows us to make assumptions that help us position ourselves in the market. Get ready to explore signs that a BTC “bull break” is imminent.

The approval of Bitcoin ETFs is imminent

First, the biggest upside in time appears to be the approval of one or more spot Bitcoin ETFs in the United States. This decision rests in the hands of the Securities and Exchange Commission (SEC). and the decision would – according to specialist James Seyffart – be made between January 8th and 10th.

This is what Seyffart, who works as a Bloomberg Intelligence researcher, said:

“The window is officially from January 5th to 10th. In reality, this means that any possible approval order will arrive on Monday, January 8th, Tuesday, January 9th, or Wednesday, January 10th. Mark your calendars, people.

James Seyffart, hedge fund specialist at Bloomberg Intelligence

The potential approval of spot Bitcoin ETFs in the United States represents a monumental opportunity for the BTC ecosystem. As investment vehicles traded on traditional exchanges, ETFs offer investors an accessible and regulated way to gain exposure to Bitcoin without having to directly own the digital currency. This is particularly attractive for institutional investors. who prefer to avoid the technical and security (and even regulatory or tax) challenges associated with directly purchasing and storing the asset.

Aside from that, The approval of these ETFs would have a significant impact on the flow of capital into the Bitcoin ecosystem. To ensure that their products accurately reflect the price of the underlying asset, the companies issuing these funds would have to purchase large amounts of BTC to finance them.

This direct purchase of the digital currency by the issuing entities implies a significant increase in demand for the asset. Such an increase in demand, combined with the limited supply of Bitcoin, simply creates upward pressure on the price Law of supply and demand.

On the other hand, the entry of spot Bitcoin ETFs into the market could further legitimize Bitcoin as an investment asset and increase general trust in the digital currency. This additional trust would lead to a virtuous cycle of increased acceptance, increased demand and therefore a possible price increase.

Finally, The approval of these ETFs would also have an indirect impact on the market. This would trigger a domino effect whereby other Bitcoin-related financial products such as futures and other derivatives would experience an increase in activity and liquidity, further contributing to momentum and stability.

The halving in 2024 will be a major catalyst for Bitcoin

The Bitcoin halving, expected in April or May 2024, is a significant event in the ecosystem of this digital currency, and its impact on the market cannot be underestimated. This phenomenon, which occurs approximately every four years, reduces by half the rewards miners receive for validating transactions and adding new blocks. The event has profound implications for both the economics of Bitcoin mining and its market value.

Historical, Halvings have had a significant impact on the Bitcoin price. When analyzing previous patterns, it is observed that Bitcoin price tends to increase significantly around six months after each halving.

The price of BTC has always reached a new all-time high around 6 months after each halving (red lines). Source: Chart created via TradingView.

This trend is attributed to two main factors. First, the halving highlights Bitcoin's inherent scarcity, a fundamental characteristic that distinguishes it from fiat currencies (and even cryptocurrencies), which can be spent indefinitely. By reducing the rate at which new Bitcoins are generated, the halving reinforces the perception of BTC as a limited and valuable asset. Second, reducing rewards for miners reduces the amount of newly mined Bitcoins available for sale on the market. A lower supply of new Bitcoins with constant or increasing demand leads to an increase in price.

By 2024, this halving effect could be even more pronounced due to convergence with other positive factors, such as the aforementioned possible approval of Bitcoin ETFs. The influx of significant capital through these ETFs, combined with the reduction in Bitcoin supply due to the halving, would result in a “super bull cycle” characterized by a significant and sustained price increase over an extended period of time.

It must be made clear that no price increase will last forever.. Bitcoin will continue to experience its corrections, declines and even new “crypto winters”, so investors must take appropriate risk management measures.

Bitcoin will sail with the macroeconomic tailwinds

Macroeconomic factors, particularly central bank monetary policy, play a relevant role in the valuation of volatile assets like Bitcoin. Inflation in the United States – the world's largest economy – is slowing. This downward trend in inflation could significantly impact the Federal Reserve's (Fed) interest rate decisions.

Inflation rate in the USA over the last 10 years. Spring:

Inflation is an important indicator that central banks use to determine their monetary policy.. When inflation is high, central banks often raise interest rates to curb spending and investment in the hope that the prices of goods and services will fall. On the other hand, if inflation declines, central banks may decide to lower interest rates to stimulate spending and investment, thereby boosting economic growth.

If the Fed decided to lower interest rates, the returns on traditional investments like bonds and savings accounts would tend to decline. This leads investors to look for alternatives with higher return potential. In this context, Bitcoin is positioned as an interesting alternative due to its potential to increase in value.

Aside from that, Low interest rates can lead to higher liquidity in the market, as cheap money encourages borrowing and spending. Some of this additional liquidity could end up in risky markets, including Bitcoin, increasing demand and potentially increasing the price.

Ordinal tokens overload the network but can boost the coin

The Ordinals Protocol, as explained by Criptopedia (educational part of CriptoNoticias), enables the development of non-fungible tokens (NFT) on the Bitcoin network. Its special feature is that it offers the possibility of storing information (e.g. texts or images) in the blockchain. Thanks to Ordinals, the BRC-20 protocol was also developed, allowing the creation of fungible tokens (similar to Ethereum's ERC-20 standard).

With Ordinals, Bitcoin becomes a more versatile and attractive platform for a variety of applications, not just finance. It is already attracting a new segment of users and developers. Many digital artists and NFT collectors have their sights set on Ordinals. The specialist in this field, Elián Huesca, explained the following in an interview with this information portal:

“If you are an artist or creator, the interest is in getting your work into the most secure and decentralized database in history.” That is, you are taking your pieces to a new market with high brand recognition (since Bitcoin is the most well-known cryptocurrency) and high purchasing power. If you are a collector, your interest is in collecting low-count atomic numbers (under 10,000, under 100,000, or under 1 million) from high-volume collections and active communities. The Short-Term Speculator profile looks for volatility in the Ordinals ecosystem, both in collections and BRC-20 tokens. “In general, I see a mix of long-term collectors and short-term speculators.”

Elián Huesca, popularizer of Bitcoin technology.

A few days ago, Ordinals trading volume surpassed that of NFTs on several networks combined (including giants like Ethereum, Solana, and BNB Chain, among others).

Despite the criticism (many consider Ordinals to be a spam attack on the Bitcoin network), the Ordinals protocol represents a significant evolution in the functionality of the network that goes beyond the purely financial aspect. While some see it as a waste of resources, others see it as a waste of resources An innovation that opens up new possibilities for using Bitcoin as a universal decentralized network. If that were to happen and capital migrated to Bitcoin from other networks, the price of BTC would skyrocket.

2024 will be a year full of great opportunities

When analyzing Bitcoin's prospects for 2024, we are faced with a number of factors that could drive its price significantly higher. The forces at work are coming together to create a potentially transformative scenario for its upgrading and adoption. For this reason, next year will be a time full of opportunities and challenges that are worth being prepared for.

In order to make good decisions, it is important for the investor to be aware of the news that directly or indirectly affects Bitcoin. Additionally, it is crucial that everyone does their own research and avoids FOMO and emotional decisions despite bullish signals. Various sections of the Cryptopedia of this information portal can be useful to anyone who wants to learn how to invest in Bitcoin.

Disclaimer: The views and opinions expressed in this article belong to the author and do not necessarily reflect those of CriptoNoticias.

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