Bitcoin is having another classic year of outperformance versus other asset classes. However, the bull market is far from over. Below are five catalysts that will drive the world’s largest cryptocurrency past $100k, including:
Widespread Institutional Adoption
Institutional adoption, the moment Bitcoin enthusiasts have waited for, is here. The Bitcoin ETF launch, which occurred earlier this year, was the most successful in history. ETFs such as the iShares Bitcoin Trust (IBIT) have attracted billions in inflows and have gained more than 70% since debuting. That said, the ETF debut has not only helped ETF operators and Bitcoin itself, but it has also led to massive earnings in the exchange custodian for these ETFs, Coinbase (COIN). Meanwhile, MicroStrategy (MSTR) has soared nearly 1,000% (not a typo) in five years after adopting the “Bitcoin standard.” Finally, El Salvador is benefitting from purchasing millions in Bitcoin, Fidelity (one of the world’s largest asset managers) owns Bitcoin, and a European Bitcoin ETF is likely to be launched soon. Bitcoin adoption is here and is insatiable. The only question left to ask is, “Who will be next?”
Bitcoin Halving = Supply Constraint
While demand is likely to soar, supply will be constrained in 2024 due to the next “Bitcoin Halving” in April. A Bitcoin halving is an event that occurs approximately every four years, reducing the reward miners receive for validating and adding new blocks to the Bitcoin blockchain by half. One of the virtues of Bitcoin is its built-in “anti-inflationary” monetary policy. The reduction in the rate at which new Bitcoins are created leads to a gradual decrease in the overall supply of newly minted Bitcoins. Though the number of halvings in Bitcoin’s history is only three, and history is no guarantor, the stats suggest that bulls should stay the course for at least the next year. Bitcoin has delivered at least triple-digit one year after the halving, including +7,715% in 2012/13, +283% in 2016/17, and +423% in 2020/21!
Image Source: TradingView/BSCNews
Election Year Seasonality
Equity investors often leverage historical seasonality trends to gain in edge in the market. Like with equities, investors can look to history to identify historical trends. For Bitcoin, the presidential election years (like the one we are in now) have been incredibly bullish. In the past three election years, Bitcoin returns were as follows: 2012 +272.4%, 2016 +161.1%, and 2020 +302.8%.
Long-Term Breakout to New High
Investors often overcomplicate technical analysis, utilizing fancy indicators and ultimately suffering from “paralysis by analysis.” However, with Bitcoin, simplicity has paid dividends and has allowed investors to block out the day-to-day volatility and noise. Bitcoin is breaking out to fresh all-time highs for the first time in years. Each time these multi-year breakouts have occurred, Bitcoin has produced meteoric returns.
Image Source: TradingView
Rising Prices, But Less Hype (Sentiment)
Over the past year, Bitcoin is up some 131.72%, sparked the most successful ETF debut in Wall Street history, and broke out to new all-time highs. Nevertheless, Alphabet’s (GOOGL) “Google Trends,” which measures the number of searches for a particular keyword, paints a much different picture than most investors would expect. First, artificial intelligence (AI) searches far supersede Bitcoin searches. Second, Bitcoin searches are about 75% lower than they were when the world’s first cryptocurrency peaked back in 2017. In other words, despite the bullish price action, there are few signs of “overexuberance.”
Image Source: Google
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MicroStrategy Incorporated (MSTR) : Free Stock Analysis Report
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Coinbase Global, Inc. (COIN) : Free Stock Analysis Report
iShares Bitcoin Trust (IBIT): ETF Research Reports