Bitcoin has been riding a bullish wave of news and rumors of an imminent approval for the BlackRock exchange-traded fund (ETF).
Despite kicking off the year at just under $17,000 per coin, Bitcoin just recently crossed the $37,000 mark.
That’s an impressive 118% increase. While there has been some pullback since then, we believe it could be just the start of Bitcoin’s next big rally.
So today, I want to look at three catalysts that could propel Bitcoin’s price to new levels in 2024.
Spoiler alert: yes, one of them is the eventual arrival of a spot Bitcoin ETF. But the other two might surprise you.
Catalyst No. 1: A Spot Bitcoin ETF Is Coming in 2024
Back in August, Inside Wall Street editor Nomi Prins showed you why a spot Bitcoin ETF is a big deal. And there’s been a lot of speculation surrounding this in recent weeks.
For instance, on October 23, BlackRock’s ETF filing popped up on the Depository Trust and Clearing Corporation’s website. This is where ETF filings go through the approval process.
People took this to mean that Blackrock’s ETF (iBTC) was a done deal. The next day, iBTC disappeared from the site, before reappearing a few hours later.
BlackRock hasn’t confirmed anything yet. But that didn’t stop people from driving the price of Bitcoin up 35% in just eight days.
With all the buzz about BlackRock, you might have missed the latest news in the Grayscale ETF case.
If you recall, Grayscale operates one of the most popular Bitcoin investment vehicles, GBTC.
Last we wrote about this, the Securities and Exchange Commission (SEC) had until October 13 to appeal the court’s latest ruling. It decided not to appeal, which suggests it might be warming up to the idea of spot Bitcoin ETFs.
And that’s what you need to understand about the spot Bitcoin ETF narrative.
It isn’t tied to a single entity. In fact, the SEC is sitting on 8-10 filings of possible exchange-traded products for Bitcoin.
Each application comes from a financial institution with assets worth billions of dollars. Each wants a piece of the potential trillions of dollars it could manage and collect management fees from.
It’s not just BlackRock or Grayscale. Big financial heavyweights like Fidelity, Invesco, and Ark are all vying for their own spot Bitcoin ETFs.
And the word on the street suggests that at least one of them could be approved in 2024.
Analysts from JPMorgan said an approval could arrive within the next few months. And Bloomberg ETF analysts say there’s a 90% chance of approval by mid-January.
A spot Bitcoin ETF would be a financial product for the masses, a more convenient way for everyday people to own Bitcoin. But it would be more than that, too.
Here’s how Nomi explained it in the November 3 mailbag edition of Inside Wall Street:
It would also make Bitcoin more appealing for institutions. We’re talking pension funds, endowments, family offices, and advisors managing clients’ investments.
You know, all those cash-loaded institutions that can’t just buy Bitcoin right now due to their charter and/or the lack of regulatory clarity.
This could be a game-changer. And that’s why speculators have been eager to grab some Bitcoin before it happens.
Think about this: Financial advisors in the U.S. alone control about $30 trillion of assets.
I’m not saying all of that will pour into Bitcoin. But even if it’s only 1%, we’re looking at hundreds of billions of fresh dollars pouring into an asset worth $685 billion today.
That’s not priced in, because there are barriers still preventing institutions from investing in Bitcoin. But the floodgates will burst open once a spot Bitcoin ETF becomes a reality.
Catalyst No. 2: The Fed’s Shift to Cutting Rates
The second catalyst comes down to the Federal Reserve.
In the past, there’s been a strong correlation between Bitcoin’s performance and the Fed’s interest rate decisions.
As a reminder, the Fed manipulates the economy by raising or lowering interest rates. And guess what…
In early 2019, when the Fed hit the brakes on its rate hikes, Bitcoin took off. It shot up over 300% by the end of June 2019.
It happened again during the 2020 pandemic, when the Fed cut interest rates to near-zero. Bitcoin’s price exploded again and rallied more than 330%.
You can see that in the chart below…
This makes sense when you think about the bigger picture. Rate cuts tend to lead to a search for higher returns through riskier assets. Bitcoin is one of them.
This is one more reason why a perfect storm is brewing for Bitcoin in 2024.
That’s because editor Nomi Prins expects the Fed to start cutting rates next year. And both the markets and policymakers are starting to accept that too.
Most Federal Open Market Committee (FOMC) members, responsible for setting rates, have expressed their expectation of rate cuts in 2024.
That’s excellent news for Bitcoin.
Catalyst No. 3: Bitcoin’s 2024 Halving
The third catalyst is one we’ve covered before in these pages: Bitcoin “halvings.”
As you may recall, the new Bitcoin supply drops by 50% every four years or so. This is known as “halving.”
Bitcoin “miners” receive Bitcoins as a reward for processing transactions. A Bitcoin halving is when that reward is cut in half.
There have been three halving events since Bitcoin’s inception in 2009. And the next halving event is scheduled for 2024.
The great thing about “halvings” is that every time Bitcoin had a halving event, its price exploded. You can see that in this next chart…
Bitcoin rocketed 8,845% higher within 12 months of the first halving in 2012. That was when the Bitcoin reward dropped from 50 bitcoins to 25 bitcoins.
It shot up 2,870% within 17 months of the second halving in 2016, when the Bitcoin reward fell from 25 to 12.5.
And within 19 months of the third halving in 2020, it gained 885%. That was the latest halving event, when the Bitcoin reward fell to 6.25 bitcoins.
Yes, returns have diminished in each halving cycle. But the fact remains, each time we’ve had a halving event, we’ve seen the Bitcoin price skyrocket.
Around April of next year, miners will see their rewards halve once more, dropping to 3.125 bitcoins.
That’s another catalyst for Bitcoin in 2024.
Perfect Storm for Bitcoin in 2024
When you look at these three catalysts, it’s obvious that the perfect storm is brewing for Bitcoin in 2024.
More people will want in, thanks to ETFs and lower interest rates. And a whole lot less Bitcoin will be available, thanks to halvings. More demand and less supply is a recipe for higher prices.
In fact, Nomi says it wouldn’t be unreasonable for Bitcoin to trade at up to $150,000 per coin by 2030.
As I write, Bitcoin is still down about 46% from its all-time high of $68,000. That means we can still buy it at lower prices before the three catalysts above push Bitcoin prices higher.
That said, with Bitcoin you never want to dive in headfirst. Instead, we recommend investing a fixed amount of money on a regular basis. That could be monthly or biweekly.
That way, you can buy more when the price is low and less when prices are high. This is called dollar-cost averaging.
PayPal or Block’s Cash App are some of the most convenient options for this. With these popular apps, you can start your Bitcoin portfolio with as little as $1.
But remember that Bitcoin is a speculative asset with violent price swings. A small investment can go a long way. So don’t ever invest more than you can afford to lose.
Regards,
Lau Vegys
Analyst, Inside Wall Street with Nomi Prins
P.S. The Federal Reserve just unleashed a new technology that editor Nomi Prins calls the precursor to an all-digital dollar. It’s set to change the very nature of our money… and the financial system as we know it. And It’s yet another tailwind for Bitcoin…
Nomi put together a video presentation where she explains what the Fed has in store for Americans… and how you can prepare for what’s coming. Watch it here.