CryptoQuant says factors like halving, ETF, approval, and rate cuts could push bitcoin to $160K next year.
Analysts are optimistic about bitcoin (btc)'s potential for the coming year, indicating several factors that could push the price to $160,000. According to a report from blockchain analytics firm CryptoQuant, bitcoin may already be on its way to more than doubling its current all-time high (ATH).
Multi-factor boost for bitcoin, according to CryptoQuant
CryptoQuant highlighted several indicators, including the upcoming bitcoin halving in April, increased network activity as demand increases, and growth recorded in stablecoin liquidity. Additionally, macroeconomic factors, such as interest rate cuts expected next year, could push bitcoin into much more bullish territory. The analysts wrote:
“On-chain valuation and network metrics indicate that bitcoin remains within a bull market and can target $54,000 in the medium term and $160,000 as the maximum price of this cycle.”
A major factor in bitcoin's favor is the spot approval of the bitcoin exchange-traded fund (ETF) expected early next year. The US Securities and Exchange Commission (SEC) is currently reviewing 13 applications and must decide by January. For the ARK 21Shares ETF from ARK Invest and 21Shares, the SEC has until January 10 to approve or disapprove it. Additionally, the Commission must decide on the request from asset manager giant BlackRock Inc (NYSE: BLK) by January 15. According to MicroStrategy's co-founder and CEO, “this could be the biggest development on Wall Street in 30 years.”
In October, CryptoQuant forecast a possible $155 billion influx into the bitcoin market via spot bitcoin ETFs. According to the company, all it would take is for each applicant to commit 1% of their assets under management (AUM). This prediction also places the price of bitcoin between $50,000 and $73,000.
In addition to bitcoin spot ETFs, the halving event is expected next April. The upcoming event will reduce mining block rewards from 6.5 btc to 3.25 btc. Historically, bitcoin begins to recover after the event, although not necessarily immediately afterward. Since the halving reduces the number of Bitcoins entering circulation, the event is positive for bitcoin prices.
The market should expect a price correction
Rate cuts are also expected to be positive for bitcoin. Observers predict that the US Federal Reserve will cut interest rates as inflation improves. Interestingly, Goldman Sachs has forecast three rate cuts for next year, in March, May and June. Additionally, the Federal Reserve hinted at 75 basis point rate cuts next year based on its projections. The main bank predicts that 2024 will end with inflation of 2.4%, up from 2.6% previously.
Despite the optimism, CryptoQuant warned that investors should expect the price of bitcoin to pull back a bit. The report says:
“In the short term, there are some risks of a price correction given that short-term bitcoin holders are experiencing high margins of unrealized profits, which have historically preceded price corrections.”
CryptoQuant also has noted an increase in miner fees. According to the firm, mining revenues and fees on December 16 exceeded $23.7 million, an all-time record. This record is mainly due to Ordinals trading volumes, which have skyrocketed recently. In the 24 hours between December 17 and 18, Ordinals sales volume almost reached $40 million, surpassing nft volumes on Solana (SOL) and ethereum (eth).
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