As the year draws to a close, Bitcoin has been making headlines for various reasons. Anthony Rousseau, Head of Brokerage Solutions at TradeStation, has outlined a bullish case for Bitcoin in 2024. His analysis is underpinned by five key factors that suggest a potentially positive year for Bitcoin, possibly even seeing it reach or surpass previous all-time highs.
FASB Rule Change: A Game Changer for Corporate Adoption
A significant development in the valuation of crypto assets comes with the Financial Accounting Standards Board’s (FASB) rule change. This mandates “fair value” accounting for crypto assets on corporate balance sheets, effective from December 15, 2024. This move could be a game changer, offering corporations a clear path to include Bitcoin as a reserve asset on their balance sheets, a strategy already employed by companies like MicroStrategy. The new accounting rules are anticipated to facilitate increased corporate inflows into Bitcoin and the broader crypto market.
Bitcoin Spot ETF: Catalyzing Institutional Investment
The potential introduction of a Bitcoin Spot Exchange-Traded Fund (ETF) is seen as crucial for institutional adoption. ETFs are favored by asset allocators and managers for portfolio diversification. While the integration of Bitcoin into traditional 60/40 investment portfolios requires further education, the prospect of a Bitcoin ETF is expected to trigger significant capital inflows from institutional investors.
The Bitcoin Halving: A Predictable Supply Shock
The anticipated Bitcoin halving, expected around April 20, 2024, is another pivotal event. Occurring every 210,000 blocks, the halving reduces the daily issuance of Bitcoin from 900 to 450. Historically, such halvings have led to a supply shock, influencing Bitcoin’s price positively in the 6-9 months following the event. This pattern suggests a potential uptick in Bitcoin’s value due to the resulting supply-demand imbalance.
Central Banks’ Policy Shifts: A Liquidity Perspective
Global monetary policies, particularly those of central banks like the Federal Reserve, play a significant role in the liquidity available in the market. With the Fed pausing its rate hikes and other central banks following suit, 2024 might see an era of increased market liquidity. Bitcoin, often seen as a reflection of net market liquidity, could benefit significantly from this environment, supporting a bullish trend.
US Election Year: Historical Performance as an Indicator
The correlation between US election years and Bitcoin’s performance offers an intriguing perspective. Historically, Bitcoin has shown substantial gains during election years, as evidenced in 2012, 2016, and 2020. This trend aligns with the broader pattern of risk assets performing well in election years. With 17 out of the past 23 US elections resulting in positive returns for risk assets, 2024’s election year could be another catalyst for Bitcoin’s growth.
Conclusion: A Confluence of Positive Factors
Rousseau’s analysis points towards a confluence of factors that could drive Bitcoin’s price upwards in 2024. From regulatory changes and institutional adoption to predictable supply dynamics and macroeconomic factors, the stage seems set for Bitcoin to potentially experience another landmark year. However, as with any financial prediction, these outcomes hinge on a myriad of variables, and the volatile nature of cryptocurrency markets means that risks always loom. Investors and market observers alike will be watching closely to see if these factors coalesce to fulfill the bullish predictions for Bitcoin in 2024.