Bitcoin Analysis: 2024 – The Peak of This Cycle

Bitcoin Analysis: 2024 - The Peak of This Cycle

A Pivotal Year for Bitcoin: A Look at the Blockchain Industry in 2024

The blockchain industry is buzzing with anticipation as experts predict that 2024 will be a pivotal year for Bitcoin. Charles Edwards, in a comprehensive report by Capriole Investments, provides valuable insights into multiple factors that contribute to this belief. From Bitcoin’s role as an inflation hedge to the upcoming Halving event and the potential impact of ETF approvals, let’s explore the confluence of catalysts that could shape the future of Bitcoin.

Bitcoin’s Performance as an Inflation Hedge

Addressing the skepticism surrounding Bitcoin’s performance as an inflation hedge, Edwards breaks the misconception by stating that Bitcoin has indeed been an excellent hedge against inflation when it needed to be. He highlights Bitcoin’s remarkable 1000% surge from Q1-2020 to Q1-2021, outpacing all other asset classes. This surge was a direct response to the Federal Reserve’s announcement of multi-trillion-dollar QE packages in March 2020. Edwards explains that in today’s fast-moving markets, pricing-in begins as soon as macro announcements are made.

To further emphasize Bitcoin’s superiority as an inflation hedge, Edwards draws a comparison with traditional hedges. During the liquidity boom, Bitcoin’s performance was unrivaled, making it the best inflation hedge to date. Edwards confidently states, “There is no second best. Bitcoin was the greatest inflation hedge we have ever seen.”

The Significance of the Upcoming Halving

The second crucial catalyst for Bitcoin’s potential success in 2024 is the upcoming halving event in April. Edwards highlights the significance of this event, noting that it will drop Bitcoin’s supply growth rate to 0.8% p.a., which will be below that of Gold (1.6%) for the first time ever. This means that in April 2024, Bitcoin will become harder than Gold, further enhancing its appeal to investors.

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To counter the argument that the halving is already priced in, Edwards draws from the lessons of Bitcoin’s past. He argues that 80% cycle drawdowns reset all interest in Bitcoin, leading to renewed enthusiasm in subsequent cycles. Moreover, Edwards points out that many on-chain metrics indicate that the current cycle mirrors those of 2019 and 2015 exactly.

The Impact of ETF Approvals and Regulatory Clarity

Edwards also discusses the regulatory landscape surrounding Bitcoin, emphasizing the clarity brought about by the CFTC’s classification of Bitcoin as a commodity in 2021. He highlights the significant announcement of Blackrock’s Bitcoin ETF application and the federal appeals court’s order for the SEC to reconsider its rejection of the Grayscale spot ETF. Edwards confidently predicts that the SEC will approve the spot ETF either in October 2023 or January 2024, which will have a significant impact on Bitcoin.

To illustrate the potential impact of ETFs on Bitcoin, Edwards draws a parallel to Gold. He mentions the significant bull run that followed the approval of the Gold ETF in 2004, with a massive +350% return and a seven-year bull run. Edwards concludes that there are three incredible catalysts on the horizon: the upcoming halving, imminent ETF approvals, and Bitcoin’s status as the best inflation hedge.

A Bullish Yet Cautious Outlook

In conclusion, Edwards presents a bullish yet cautious outlook for Bitcoin in the coming years. While he acknowledges short-term bearish signals, he remains optimistic about the long-term prospects. He observes that in Bitcoin’s four-year cycles, around 90% of returns typically occur within 12-18 months, followed by 2-3 years of sideways and downward trends. Edwards believes that the single highest returning year of this cycle will be 2024, supported by the data.

As Bitcoin continues to surge in value, reaching $26,246 at press time, the blockchain industry eagerly awaits the year 2024. With a confluence of catalysts including Bitcoin’s reputation as an inflation hedge, the upcoming halving event, and the potential ETF approvals, the future of Bitcoin looks promising. Whether 2024 will indeed be a pivotal year remains to be seen, but the signs are pointing towards another transformative phase in the evolution of the blockchain industry.

In the 4-hour chart, BTC is seen being rejected at the 100 EMA, indicating a potential resistance level. Nonetheless, considering the wider context and the upcoming catalysts discussed, the overall sentiment remains positive for the future of Bitcoin.

Disclaimer: The above article is for informational purposes only and should not be taken as financial advice. Cryptocurrency investments are subject to market risks, and readers should do their own research before making any investment decisions.

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