Bitcoin Has Recovered, But Where Next?
We look at several potential catalysts for Bitcoin and the crypto world to build off 2023.
Cryptocurrency sentiment is ending 2023 utterly different to how it ended 2022. After falling 65% last year (a retracement aided by the Luna collapse and the FTX/Sam Bankman-Fried downfall), we don’t think many had Bitcoin as an outperformer for 2023. But that is precisely what happened.
And there are a few catalysts to look forward to in 2024…
Let’s start with the most significant topic for the crypto world. The Bitcoin ETF is expected in the coming days. This has been one of the biggest drivers of the asset price, taking it from the mid-20s to mid-40s over the last months.
There is a Jan. 10 deadline for the US Securities and Exchange Commission to decide whether to give its first go-ahead for a spot Bitcoin ETF. Grayscale is seeking approval to convert its Bitcoin trust, the world’s biggest, into an ETF.
On Tuesday, the Grayscale Bitcoin Cash Trust soared 18% in trading volume, more than seven times the six-month daily average.
One question to ask is: Will the ETF be a “buy the rumour and sell the news” event? We think so - at least in the short term. But the medium term will widen the investor base as access to crypto becomes broader and more available. Further expansion to ETFs, from the likes of BlackRock and Fidelity, would continue the positive momentum and sentiment.
Our key watch is for the “sell the news” to pass by in 2024 without too much effect, and then Bitcoin (and the wider crypto sector) to build on the new ETFs.
Recent news came out this week that one of Cathie Wood's exchange-traded funds made a significant restructure in its holdings tied to the cryptocurrency.
The ARK Next Generation Internet ETF sold all of its remaining 2.25 million shares of the Grayscale Bitcoin Trust on Wednesday, according to data compiled by Bloomberg. The same day, it bought 4.32 million shares of ProShares Bitcoin Strategy ETF, according to Ark Investment Management LLC’s daily data, making it the second-biggest holder of the fund.
Before we go further, if you are interested in Crypto, we suggest the following two writers who cover the space here on Substack:
Crypto Hedge Funds
After a brutal 2022, many cryptocurrency hedge firms are rebounding and even prospering. Some even anticipate a spectacular 2024.