The crypto market experienced a remarkable rally from late last year up to now. However, all good things eventually come to an end. The market is facing a shortage of compelling short-term narratives, significant selling pressure, and unfavorable seasonal trends. While increased liquidity might provide some relief, it is unlikely to make a significant impact in the near term.
Bitcoin does not currently function as a safe haven. According to our quantitative model, it behaves more like a risk-on asset, similar to technology stocks. However, there is potential for Bitcoin to become a safe haven in the future. At this point, there is evidence suggesting that Bitcoin effectively serves as an inflation hedge.
Over the weekend, geopolitical tensions sent Bitcoin and Ethereum tumbling, but the crypto market quickly rebounded, arguably thanks to Hong Kong’s new ETF approvals and the upcoming Bitcoin halving. Despite this recovery, ongoing Iran-Israel tensions could still disrupt the market.
Bitcoin is at the forefront of the market, with other cryptocurrencies attempting to keep pace. We anticipate a continued upward trajectory until a shift occurs, particularly for Bitcoin, in the months following the upcoming Bitcoin halving.
We foresee the next Bitcoin halving as a short-term “buy the rumor, sell the news” event, echoing the 2016 halving’s pattern, this time around even with heightened anticipation from Bitcoin ETF holders. However, long-term, we expect it to bolster Bitcoin’s price significantly, as the market tends to underappreciate the impact of these supply shocks.
As we step into 2024, it seems like everyone is long crypto left, right, and center. This environment does not elicit much enthusiasm from us, as it brings back memories of the exact opposite situation just a year ago. We have identified five key factors that we believe will shape 2024. Among them, three are anticipated to pose potential downsides, one holds the potential for an upside surprise, and there is a joker that seems to be completely overlooked.
