Crypto Analysts Say Bitcoin Could Reach $160,000 After ETF Approval
A number of catalysts, combined with historical patterns, could "catalyze" the first cryptocurrency to $160,000 in a bull market in 2024, according to a report by CryptoQuant, writes CoinDesk.
Driving factors of Bitcoin
According to analysts, demand for digital gold from several spot ETFs in the United States, the upcoming halving, and growth in the stock market after a reduction in interest rates in the United States could raise the price of the asset to at least $54,000 in the short term.
Among the main positive factors, experts identified:
- Growth in on-chain activity
- Halving of the reward for mining a block
- Macroeconomic prospects
- Spot Bitcoin ETF
- Growing liquidity of stablecoins
CryptoQuant expects the Federal Reserve of the United States to lower interest rates in 2024 as inflation continues to decline. A lower rate has historically contributed to the growth of risky assets such as technology stocks and cryptocurrencies, the authors of the report added.
However, analysts pointed to the possible decline in quotations in the short term, citing the large unrealized profit of investors.
"There are some risks of price corrections, given that short-term Bitcoin holders are receiving high P&L, which has historically preceded a decline," analysts said.
Since the beginning of the year, the first cryptocurrency has grown by 160%. According to CoinGecko, at the time of writing, the coin is trading at $43,840 with a market capitalization of $858 billion.
Earlier, MicroStrategy founder Michael Saylor predicted that Bitcoin would either fall to zero or rise to $1 million.
When to expect ETF?
QCP experts suggested that there are less than three weeks left before the approval of a spot exchange-traded fund based on Bitcoin. The product will be announced after the close of trading on January 5 or in the period from January 8 to 10.
"As the market is finally approaching the launch of [exchange funds], it is important to note that the actual demand for spot ETF-BTC at the start is likely to be lower than expected. This creates a classic "sell on the news" scenario on the second week of next month," analysts clarified.
In the event of a similar development, Bitcoin will face the upper level of resistance at levels near $45,000-48,500 and a possible retracement to $36,000 before resuming the upward trend.
However, QCP is confident that the crypto rally will continue as the market prepares for the upcoming halving.
"Ethereum may also be an interesting "laggard play", as investor expectations could quickly shift to spot ETH-ETFs, potentially leading to some transition from Bitcoin to the second-largest cryptocurrency by capitalization," researchers emphasized.
According to the company's experts, the hype in headlines about the product launch could create a speculative rise in the price of Ethereum, regardless of whether it is justified or not.
In a podcast on December 19, Coinbase institutional research head David Duong and senior exchange trader Greg Sutton identified two major risks of Bitcoin ETFs.
First, the launch of the product could cause liquidity problems on the issuing platforms.
"You need to buy Bitcoin in certain regulated places. What if the demand is so great that these guys can't get the amount of the asset they need?" - the company's employees think.
Duong admitted that this is a relatively positive problem compared to low inflows.
Second, there is a danger of "breaking" the classic "basis trading" strategy, which involves using the difference between the spot and futures price of Bitcoin contracts. This can happen due to a disruption of market balance.
The SEC is considering 13 applications for a spot exchange-traded Bitcoin fund. On June 15, BlackRock submitted the relevant application to the regulator. Following the financial giant, similar requests were received from Valkyrie, Fidelity Investments, WisdomTree, and Invesco.
On August 31, the Commission postponed the decision on several Bitcoin ETFs for at least mid-October. In late September, the agency transferred the consideration of applications to January 2024.
Recall that in December, Bloomberg analyst James Seyffart also stated about the potential approval of a spot Bitcoin ETF in January.
In the same month, Morgan Creek Digital co-founder Anthony Pompliano warned that the launch of the ETF would not double the price of the first cryptocurrency overnight.