It's hard to overstate how optimistic Bitcoin's outlook for 2024 is. While many people may feel like they're too late (Why didn't I buy it for less than $100?), as if they missed the opportunity, this probably wasn't a better time to jump in. More specifically, the ratio of potential rewards versus risks behind Bitcoin has never been more attractive. Demand, supply, awareness, narrative, basics; It seems that all the stars are aligning to give us an unforgettable year in 2024. In particular, here are the top 21 reasons why Bitcoin's forecast for 2024 is exceptionally bullish.
Requests
1. Multiple Bitcoin ETFs are expected to be approved by the Securities and Exchange Commission in the coming weeks, bringing billions of dollars in additional demand as the asset becomes investable to institutions via a traditional financial product. At the same time, ETFs raise awareness about assets and provide regulatory clarity as well as support for major financial institutions. This expectation is evident in the declining discount at which Grayscale Bitcoin Trust (GBTC) trades against Bitcoin, from almost a 50% discount last year to a discount of less than 10% in December 2023. Moreover, countless close analysts and asset managers have weighed in. One of their expectations is the imminent approval of the Bitcoin ETF.
Supply
2. Bitcoin's fourth halving will come in April, and so far, the asset's price movement (+150% YTD) is consistent with the last three halving events, which resulted in 101x, 30x and 8x gains, respectively, post-halving. Halving the supply means that the downward pressure on Bitcoin's price will decrease, because miners will only get half the number of Bitcoins they can sell per day (900 Bitcoins per day). It also leads to the next level of scarcity, where Bitcoin's stock-to-flow ratio will suddenly double. Specifically, April 2024 will make history, as Bitcoin will become the rarest asset in the world (the highest asset in terms of stock and flow), taking that title from gold for the first time.
3. The liquid supply declines faster, as more bitcoins move into wallets controlled by illiquid holders. Specifically, more bitcoins are being moved into private custody rather than being held and traded on exchanges. A decrease in liquid supply means that the multiplier effect of purchases increases: when an entity buys $1 billion worth of Bitcoin, the market value of Bitcoin increases by more than $1 billion, because that purchase affects the price upwards.
Systems
4. The Financial Accounting Standards Board (FASB), the entity that sets accounting and financial standards for companies in the United States, voted in September 2023 to adopt fair value accounting for Bitcoin. This change means that companies can hold Bitcoin on their balance sheet at the market price, and can therefore recognize unrealized gains, rather than having to treat them as intangible assets and follow an impairment model. This is an important development, because it opens the way for companies to increase their reported earnings and equity when their Bitcoin holdings rise. This change makes bitcoin holdings more attractive to companies, not only because they can show more positive financial results when bitcoin rises, but also because the FASB's move could be seen as legitimizing bitcoin as an asset class.
5. The Satoshi Action Fund, a US educational non-profit organization, expects the passage of pro-Bitcoin regulations in 10 US states in 2024, as well as pro-Bitcoin regulatory developments in 2023. More regulatory clarity increases institutional investments, enhances consumer confidence, and stimulates Bitcoin entrepreneurship, which increases the demand and potential of the asset.
The basics
6. Adoption is increasing as the number of addresses holding one full Bitcoin is now at an all-time high. Likewise, addresses holding more than 0.1 BTC and addresses holding more than 0.01 BTC are also showing all-time highs.
7. Bitcoin's hash rate has now reached a new all-time high of 500 EH/s, cementing its position as the most secure network ever.
8. In contrast, Bitcoin's volatility has been trending downward in line with asset maturity. The low volatility of an asset is especially important for investors who look at its return-to-volatility ratio (for example, the Sharpe ratio or Sortino ratio). With its high yield and relatively low volatility, Bitcoin is enhancing its appeal for investors.
9. Furthermore, Bitcoin's correlation with traditional asset classes has fallen to all-time lows. The low correlation with other asset classes makes Bitcoin a very attractive addition to any traditional investment portfolio (e.g., hedge funds, pension funds, family offices), because it enables asset managers to lower the volatility of their portfolio while increasing their expected returns.
10. Bitcoin's decentralization of its mining activities is expected to increase. For example, thought leaders like Jack Dorsey are investing millions in a decentralized Bitcoin mining pool called OCEAN. Although it may be a small investment so far, this move at least highlights the issue, and invites other miners to follow suit. More decentralization of the protocol reduces its risks and thus makes it more valuable.
11. Layer 2 solutions (e.g., the accelerator network) are finally becoming scalable, enabling Bitcoin to be used as a medium of exchange: instant transactions with almost no fees. Specifically, Lightning adoption has increased by a factor of 10 since the summer of 2021. With this new functionality, Bitcoin as an asset in 2024 will be vastly different (and superior) to Bitcoin as an asset in previous years.
12. Bitcoin balances on exchanges are declining because people understand the importance of self-custody. Personally, I see this development as an indicator of reduced market speculation and real use of the asset acting as a decentralized store of value.
13. In November 2023, we hit another new record: more than 70% of Bitcoins have not moved in over a year. This development occurred despite the price of Bitcoin more than doubling during that period. Again, this record supports the theory that speculation in the asset is decreasing as it is replaced by long-term holding.
a novel
14. The narrative around Bitcoin as an ESG asset is finally being recognized and starting to stabilize: from providing banking services for the unbanked, to mitigating methane emissions, stimulating renewable energy production, and stabilizing power grids. Peer-reviewed publications and traditional media are increasingly covering this aspect of Bitcoin, which is likely to generate more interest from the public in the asset.
15.Traditional investment managers have recently become supporters of Bitcoin. One of the biggest developments of 2023 is Larry Fink's 180-degree turnaround in Bitcoin. After calling Bitcoin an “indicator of money laundering” in 2017, he now vocally supports it and views its recent price rise as a “flight to quality.” As CEO and chairman of the world's largest investment firm, BlackRock, his opinion will not go unnoticed. Likewise, Jurian Timmer, director of global macroeconomics at Fidelity, sees this as a “hedge against monetary deterioration” and “accelerating gold.”
16.The difference between Bitcoin and all other crypto assets is becoming increasingly clear: one is a commodity (an asset without issue), while almost all the others are securities (not true decentralized assets). With upcoming regulations likely to support this position, Bitcoin's unique situation will once again be highlighted.
consciousness
17.El Salvador, where bitcoin is legal tender, received an upgrade in its credit rating by S&P in November 2023, highlighting the early success of its bitcoin strategy. Additionally, in December 2023, the country's Bitcoin investment value turned positive for the first time, two years after Bitcoin accumulated in the longest bear market the asset has ever seen.
18. Moreover, a liberal economist who is openly pro-Bitcoin was elected president of Argentina in November 2023. Javier Miley's videos have already gone viral, in which he denounces the vices of socialist economies and fiat currencies. For example, his interview with Tucker Carlson in mid-September 2023 is among the most viewed videos on Platform X, with over 400 million impressions already.
19. Several US presidential candidates have pledged to bring up Bitcoin as a topic in the 2024 elections. Specifically, prominent pro-Bitcoin candidates for the highest office in the US include Ramaswamy, Kennedy, and DeSantis. The debates will put Bitcoin at the forefront and force all candidates to take a position on the issue.
behind
20. The Taproot upgrade integration of the Bitcoin protocol in November 2021 allows smart contracts to be executed directly on the Bitcoin blockchain. Taproot not only simplifies transaction efficiency, but also opens up the possibility of executing complex contract-like functions directly on the Bitcoin network, taking advantage of its decentralization, security, and robustness. This advancement presents a new world of possibilities for decentralized finance (DeFi) and other applications. Such developments begin to appear in 2023 and could become a decisive milestone in 2024.
21.In the next wave of Bitcoin adoption, it may become clear that Bitcoin is much more than just money. For example, when American pioneer Jason Lurie released his best-selling book Programming Earlier this year, it raised awareness about Bitcoin's potential beyond the cash and financial markets. Specifically, Bitcoin security can be leveraged not only for financial information, but also as a cybersecurity protocol, which may become a strategic national security imperative for all countries. As Hal Finney posted on December 5, 2010, “Bitcoin is a global, decentralized, yet consistent database,” inviting readers to consider the many applications of this database. While this idea is still in its infancy, the seed has been planted and a wonderful vision is growing. No one knows the date of the harvest, but when it comes, it is expected to usher in an era of unprecedented innovation and prosperity.
As 2023 draws to a close, the Bitcoin landscape presents a host of promising developments, each contributing to a strong and optimistic outlook for the year ahead. From an expected influx of institutional investment to transformative regulatory changes and the milestone of Bitcoin's fourth halving, the stage is set for significant growth and broader adoption.
Furthermore, the evolving perception of Bitcoin as a secure, decentralized asset and its growing recognition as an environmentally and socially responsible option underscores its potential to transcend its current role in the financial landscape. The enthusiastic embrace by global leaders and innovative advances in technology only add to this narrative of progress and potential.
Each of these 21 reasons not only stands on its own merits, but also intertwines with others to create a tapestry of interconnected factors that collectively strengthen Bitcoin's place in the global economy. 2024 promises to be a pivotal year in Bitcoin's history, one that will cement its place in the annals of economic history. The future is bright orange, and it's time to pay attention.
This is a guest post by Thomas Jaegers. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
