Unreal Trends – Bitwise CIO Matt Hougan has laid out a compelling and detailed analysis of why Bitcoin might reach the $100,000 mark by the end of 2024. Despite facing several current challenges, Hougan identifies five key factors, or tailwinds, that could drive this significant price surge.
Navigating the Current Headwinds – Bitcoin has recently experienced a decline, dropping 21% from its all-time high of $73,836 set in March. This downturn is influenced by several major events:
Mt. Gox Distributions: The defunct exchange Mt. Gox has begun distributing around $8 billion worth of Bitcoin to its creditors. So far, 47,229 bitcoins (worth approximately $2.7 billion) have been sent to platforms like Bitbank and SBI VC Trade, with another 94,771 bitcoins (about $5.4 billion) still to be distributed via Kraken, Bitstamp, and BitGo. This influx of Bitcoin into the market can create short-term selling pressure.
Government Sales: The German government has recently sold over $1 billion worth of Bitcoin. These bitcoins were seized from the film piracy site Movie2K, and about 13,110 bitcoins (worth $761 million) remain. Similarly, the U.S. government holds around $12 billion worth of Bitcoin, seized from the online black market Silk Road in 2013. The U.S. Marshals Service has appointed Coinbase Prime to sell these assets, which could soon enter the market.
Hougan emphasizes that these headwinds are primarily one-off events causing temporary liquidity shocks. As these distributions and sales conclude, their impact on Bitcoin’s price is expected to diminish.
Key Tailwinds Driving Bitcoin’s Potential Surge – Spot Bitcoin ETFs (Exchange-Traded Funds): One of the most significant tailwinds is the introduction of U.S. spot Bitcoin ETFs. These financial products have attracted over $15 billion in net inflows since their launch in January, marking the most successful ETF launch ever.
Hougan predicts that as these products become approved for mainstream use by major wealth management platforms like Morgan Stanley and Wells Fargo, billions more will flow into Bitcoin ETFs, boosting demand and price.
Bitcoin Halving Event: Scheduled for April 2024, the next Bitcoin halving will reduce the daily supply of newly mined bitcoins from 900 to 450. Historically, such halving events have led to substantial price increases due to the decreased supply and increased scarcity of Bitcoin. Hougan expects this halving to contribute significantly to positive price action over the year.
Spot Ethereum ETFs: In addition to Bitcoin, ETFs tracking Ethereum (ETH) are expected to launch soon. Hougan forecasts that these ETFs will attract around $15 billion in net inflows within the first 18 months. Bitwise, which manages one of the U.S. spot Bitcoin ETFs, plans to launch its own spot Ethereum product, further enhancing market interest and liquidity.
Changing Political Attitudes: Recent months have seen a notable shift in political attitudes toward cryptocurrency. This shift is driven by one of the strongest networks of pro-industry Super PACs (Political Action Committees) in Washington D.C. and the GOP’s incorporation of crypto into its official 2024 platform. This political support could lead to more favorable regulatory environments, promoting growth and stability in the crypto market.
Federal Reserve Rate Cuts: The Fed funds futures market is currently pricing in two rate cuts by the end of the year. Lower interest rates generally benefit cryptocurrencies, as they encourage investment in higher-risk assets like Bitcoin. Hougan believes that these anticipated rate cuts will create a more favorable macroeconomic environment for crypto.
Additional Factors Supporting Crypto Growth – Hougan also highlights other important factors that could drive Bitcoin to $100,000 and push Ethereum to new all-time highs:
Stablecoin Market Growth: Strong growth in the stablecoin market, which provides liquidity and stability, is a positive indicator for the broader crypto ecosystem.
Layer 2 Development: Advances in Layer 2 solutions, which aim to increase transaction speed and reduce costs on blockchain networks, are enhancing the usability and scalability of cryptocurrencies.
Institutional Involvement: Increased involvement from major financial institutions, like BlackRock, signals growing mainstream acceptance and investment in crypto assets.
Conclusion
Despite current market challenges, the long-term outlook for Bitcoin and other cryptocurrencies remains highly positive. Key tailwinds, such as ETF inflows, the Bitcoin halving event, changing political attitudes, and potential Fed rate cuts, set up a favorable environment for significant price increases. With these factors in play, Bitcoin could realistically hit $100,000 by the end of 2024, while Ethereum could reach new all-time highs. The growing institutional interest and technological advancements further bolster this optimistic outlook.
