- Cryptocurrencies like Bitcoin, Biconomy, and Ethereum have surged.
- He believes that the SEC will finally approve a spot Bitcoin ETF soon.
- The next Bitcoin halving event will coincide with Fed rate cuts.
Cryptocurrencies have done well this week. Bitcoin has already pumped from last month’s low of $24,800 to a multi-month high of $35,000. As a result, the total market cap of all digital currencies has jumped to over $1.27 trillion.
Some analysts believe that this crypto rally has more room to run. One of them is Andrew Pompliano, a leading crypto investor. In an interview with CNBC, he made the case why he believes that Bitcoin will surge to over $40,000 in the coming months.
First, he argued that the SEC will soon approve a spot Bitcoin ETF in the coming months or weeks. Even before that happens, Blackrock, the biggest asset manager in the world with over $9 trillion in assets, has already started seeding the ETF. The other companies like Franklin Templeton and Invesco have likely started doing that.
A Bitcoin ETF approval will need thousands of Bitcoins. Unfortunately, the supply of these coins is quite limited. While over 19 million Bitcoins have already been mined, it is estimated that over 4 million of them have been lost. This leaves about 15 million of them in circulation. But again, inventories in exchanges has slumped to a multi-year low.
Therefore, these companies will need to pay more money for Bitcoins in the coming months.
Second, Pompliano pointed to the Federal Reserve, which has been in an aggressive period of rate hikes and quantitative tightening (QT). It has already hiked rates to 5.50% and there is a possibility it will continue the doing that.
The implication of high interest rates is that the American government is now having to pay over $800 billion per year to service the debt. Therefore, with wars going on and with the economy showing signs of slowing down, Pomp believes that the Fed will start to cut interest rates in 2024.
Rate cuts will also coincide with the next Bitcoin halving event, which will take place in April. Halving will make Bitcoin more scarce. Historically, cryptocurrencies like Bitcoin tend to rally ahead of the halving event.
If this happens, other cryptocurrencies will likely rally as well. Some of the most notable coins to watch will be Ethereum (ETH), Taboo Token, Pepe, Floki Inu, Bitcoin SV, Biconomy, and Bitcoin Gold. Historically, these coins have a close correlation with BTC. At times, they do better than Bitcoin when there is a major bull run.
