Bitcoin is trading at $43K, virtually unchanged in 24 hours. It seemed to have become a stablecoin in December, but a swing replaced the humdrum rate when ETFs were introduced in January.
In recent weeks, Bitcoin’s price correlation with stocks has risen markedly. At first glance, this seems concerning because stocks are in the final stages of a rally, where security corrections are juxtaposed with abnormally sharp moves in instruments like Amazon and Meta.
After spot ETFs launched on January 11, inflows totaled $7.7 billion. According to CoinShares data, the total global assets under management amount to $53 billion.
More buyers expected
Many insiders predict buyers on the market will increase after ETF approval, making it easier for retail investors to trade BTC-related investment funds in US stock exchange platforms.
In January, spot Bitcoin ETFs from Fidelity and BlackRock ranked among the most prominent 10 US ETFs in terms of asset inflows. The total net inflows of the two funds amounted to $4.8 billion. Grayscale Bitcoin Trust outflows reached $5.7 billion.
The Bitcoin price could increase even more when the Federal Reserve reduces the record benchmark rate. Analysts expect higher liquidity to flow into the flagship crypto when that happens.
Price predictions
The Bitcoin price is projected to reach a new all-time high of $88,000 this year before it drops to around $77,000 by its end, according to a study by UK fintech firm Finder, quoted by Euronews. The study is based on the price predictions of 40 crypto experts on Bitcoin’s trajectory from now to 2030. Some experts even predicted it would reach $200,000.
Others weren’t as optimistic. On average, the Bitcoin price can drop to $35,734 by the end of 2024. Some even forecast it would fall to as little as pre-2024 levels of $20,000.
The impact of halving
Still, the majority of experts surveyed by Finder expect the Bitcoin price to increase, partially due to the upcoming halving event in April 2024. After halving events, the reward for mining Bitcoin is cut in half. Currently, miners are getting 6.25 BTC per validated transaction. This is expected to decline to 3.125 BTC.
Fewer Bitcoins become available after halving events, consequently leading to higher prices. CryptoQuant data shows mining pool reserves have dropped to their lowest level in three years, which means miners are selling Bitcoin in anticipation of the halving.
Fewer than 20 experts surveyed in the Finder study believe the biggest crypto by market cap will reach a new all-time high half a year after halving. Komodo CTO Kadan Stadelmann commented that Bitcoin was under “a fair bit of pressure” because leading investors were demonstrating rising interest in it, which “is likely to drive demand.”
The bears speak
Not everyone thinks the Bitcoin price is on a bullish path. According to John Hawkins of the University of Canberra, it is still a primarily speculative tool. Hawkins said:
There could be a temporary price increase if the new spot Bitcoin ETFs are popular. But, in the medium to longer term, I still regard Bitcoin as a speculative bubble.
He recalled a relevant development in 2021 when Bitcoin’s price increased in anticipation of similar ETFs entering the market but later dropped.
What to expect in the near- to mid-term
The experts expect Bitcoin price to reach $122,688 in 2025 and $366,935 five years later. The “truncated mean,” which measures central trends, puts the price at around $221,000 by 2030. Just under 60% of the experts recommend buying Bitcoin, and 38% advise investors to hold. Just 5% recommend selling.
Other factors
According to The Block, Bitcoin transaction volume has been rising for four months in a row. In January, it reached $1.21 trillion, a record since September 2022. The cryptocurrency’s volatility remains at very low levels.
Bitcoin bull Nayib Bukele was reelected president of El Salvador, which led experts to predict rising prices and an inflow of capital to the Central American country.
Bitcoin and stocks: Recap
Bitcoin’s price does not have a consistent correlation with stocks. While there have been periods of correlation between Bitcoin price and traditional stock markets, such as during market stress or when broader economic factors affect both asset classes, the relationship is not constant.
Bitcoin’s price tends to be volatile and can be influenced by various factors unique to the cryptocurrency market, making it difficult to predict or establish consistent correlations with other asset classes over time.
