Image source: LinkedIn
Blockstream CEO Adam Back believes 2024 could mark a period of Bitcoin (BTC) resurgence and push the leading cryptocurrency towards $100,000.
In a recent interview, the renowned cryptographer and pioneer of the Proof-of-Work algorithm used in the Bitcoin protocol said that Bitcoin is currently below the historical price trendline observed during previous mining reward halving events.
Bitcoin's block reward halving is programmed to occur every 210,000 blocks, reducing the block reward for miners from 6.25 BTC to 3.125 BTC.
Back noted that when taking into account the average trends of previous market cycles and halvings, Bitcoin's current value falls short of widely accepted predictions.
Various factors have contributed to the decline in BTC price, which can be seen in both traditional financial markets and the cryptocurrency space.
“The last few years have been like a biblical plague. There was COVID-19, quantitative easing and wars affecting electricity prices. Inflation is driving people up, companies are going bankrupt,” Back explained.
These market challenges have had a profound impact on portfolio management and investment strategies.
Investment managers had to manage risks and losses, which often resulted in selling more liquid assets, including Bitcoin.
“They have to raise cash, and sometimes they sell the good stuff because it’s liquid, and Bitcoin is super liquid. “That used to happen with gold, and I think that’s been a factor for Bitcoin in the last few years.”
Looking ahead to 2024, Back said many of the macroeconomic events that negatively impacted the price of Bitcoin have either abated or been resolved. This is reflected in Bitcoin’s recent price increase from November 2023.
“The wave of contagion, the companies that went bankrupt because they were exposed to Three Arrows Capital, Celsius, BlockFi and FTX – that's mostly taken care of. We don’t think there are many big surprises ahead,” said the crypto veteran.
Back still thinks Bitcoin would reach $100,000
Previously, the CEO of Blockstream predicted that Bitcoin would reach $100,000 in the next market cycle and he stands by this prediction.
He claimed that without the aforementioned macro factors, Bitcoin would have already reached this milestone.
Back also points to the Bitcoin “stock-to-flow” model developed by pseudonymous former institutional investor PlanB.
If you want to learn more about Bitcoin Stock-to-Flow:
*This is the original article from 2019: https://t.co/n5P5uMCKHT
*Or watch this YouTube video:https://t.co/3SGMU1Ln00 pic.twitter.com/Qp8SjqtXIB
— PlanB (@100trillionUSD) December 5, 2023
This model indicates the potential bullish trend for Bitcoin in 2024.
According to Back, the model suggests that smart Bitcoin investors have historically bought BTC six months before a halving event and sold during significant price increases in the 18 months following the reward reduction.
“People thought it was a bit crazy claim that we could hit $100,000 before the halving because I said that when the price was around $20,000,” Back said.
He noted that Bitcoin price repeatedly hitting $44,000 in December 2023 suggests that his previous prediction may not be as far-fetched as some initially believed.
Prominent investors and market analysts have also highlighted the potential impact of the U.S. Securities and Exchange Commission (SEC) approving multiple spot Bitcoin exchange-traded fund (ETF) applications.
Eric Balchunas and James Seyffart, senior ETF analysts, expect these applications to receive the green light in early 2024.
Michael Novogratz, co-founder of Galaxy Digital, also predicts that significant institutional investments will flow into BTC-backed products, an assessment also shared by Back.
“I think Bitcoin could reach $100,000 even before the ETF and before the halving. But I definitely think that the influence of the ETF should not be underestimated,” emphasized Back.
A key reason for this belief is that certain segments of traditional markets, including large fund managers like BlackRock and Fidelity, are currently blocked from investing directly in assets like Bitcoin.
“If they manage a mutual fund, there are rules in place either externally or as part of their fund that they can only buy things like public stocks and ETFs. They can't buy into startups, they can't physically buy precious metals. You can’t do any of this.”
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