Matrixport, a leading crypto financial services platform and leading broker for institutions, has predicted a significant rise in the price of bitcoin. In its latest note to investors, Matrixport suggests that the price of bitcoin could rise to $50,000 by the end of the week.
Why it seems possible to reach $50,000 per bitcoin this week
Matrixport analysis, published on January 2, 2023, under the title “bitcoin's Explosive Rise to $50,000 Looms in January,” argues that the consolidation seen in bitcoin's price towards the end of last year sets the stage for a solid start to 2024. “After the typical consolidation in mid-to-late December, bitcoin is poised to break out into a strong flow of buying at the beginning of the year,” the report states.
An important factor in this expected rally is the change in sentiment among institutional investors. In contrast to last year's bearish outlook, current market dynamics have created a situation where institutional investors, fearful of missing out on potential gains, are expected to invest heavily as soon as markets open in 2024.
“Institutional investors cannot afford to miss out on any potential rally again and therefore have to buy immediately when the markets open for trading in 2024,” notes Matrixport, expecting an immediate rally that could catch many investors off guard.
The possible catalyst for this rise, according to Matrixport, is the planned approval of a spot ETF, which could be announced sooner than most traders expect. “A possible approval of a bitcoin spot ETF could be announced today or tomorrow, ahead of most traders' expectations of approval on January 8, 9 or 10,” the report highlights.
This approval is not seen as a “selling the news” event, but as a legitimization of btc as an asset class for institutional portfolios, which could lead to significant price increases.
More reasons to be optimistic in 2024
Matrixport also points to the lower availability of bitcoin on exchanges as a factor that could amplify this rally. “70% of Bitcoins in circulation have remained 'still' over the past twelve months,” the report observes, indicating a shortage of btc in the market that could drive prices up.
Looking ahead, Matrixport refers to the next halving cycle in April 2024 as another reason for a possible supply shortage and subsequent price increase. They draw parallels with commodity markets, where forced buying in the face of reluctant selling can lead to dramatic price increases.
Additionally, the report draws attention to historical trends and notes that bitcoin has shown strong performance during halving cycles, which coincide with the US election cycle. “bitcoin's average performance during the 2020s , 2016 and 2012 was +192%,” Matrixport states, setting a long-term target of $125,000 for btc based on its 'new one-year high' indicator.
Finally, the report comments on the current status of the funding rate, which remains elevated, indicating bullish sentiment among cryptocurrency traders. “This morning, the funding rate is hitting a new high of +66%,” the report observes, suggesting that the futures market is putting upward pressure on the bitcoin spot market price.
“This is how the futures market is squeezing the spot market and will likely lift btc above our target level of $50,000 by January 2024, which seems reasonably achievable. We could trade above $50,000 at the end of this week,” Matrixport states in conclusion, setting a high bar for btc performance in the first week of 2024.
At the time of publication, btc was trading at $45,757.
Featured image created with DALL·E 3, chart from TradingView.com
