Matrixport: BTC spot ETF will be approved, BTC may rise to $50,000

Source: Matrixport; Compiled by: Songxue, Golden Finance

Matrix on Target wrote on December 21, 2023, "Bitcoin will explode to $50,000 in January." After a typical mid- to late-December consolidation, Bitcoin is poised for a strong wave of early-year buying power that could see it break through resistance.

A year ago, most market participants were bearish and therefore under-positioned. However, things were different, with stocks and cryptocurrencies rising sharply. Institutional investors cannot afford to miss out on any potential rally again and must buy as soon as the market opens in 2024. We expect that the coming rally will once again catch investors off guard.

Potential approval of a Bitcoin spot ETF could be announced today or tomorrow, earlier than January 8 as expected by most traders Approved on the 9th or 10th. If this happens, we expect Bitcoin prices to rise significantly. This is unlikely to be a “sell-off news” event, as approval would legitimize Bitcoin as an asset class in institutional portfolios that can be used as collateral for purchases of other assets.  

Conversely,risks may rise as $5-10 billion in fiat currencies may Unable to find enough Bitcoin on exchanges to gain exposure to the Bitcoin ETF. Following the 2022 bankruptcy and collapse of the FTX cryptocurrency exchange, many Bitcoin holders have moved their BTC off exchanges and become more familiar with cold storage options. As a result, 70% of Bitcoins in circulation have remained “static” over the past 12 months.

In October 2023, we estimate that Bitcoin spot ETFs listed in the United States may usher in 24-50 billion dollar inflows. We also estimate the potential rise in Bitcoin price based on its relationship to changes in Tether's market capitalization. This keeps us bullish throughout the end of the year, especially after Fed Chairman Powell appeared to turn dovish in October 2023.

Bitcoin mining companies tend to limit supply around the halving cycle, which is expected to occur in April 2024; this may be a supply Another reason for the shortage. Sometimes this is a price development seen in commodity markets when market participants are forced to buy and sellers refuse to sell at those price levels. The result has been a sharp increase in prices. The direction of Bitcoin’s price this year may surprise everyone.

As we have pointed out,Bitcoin tends to rebound strongly during halving cycles, which are associated with The U.S. election cycle is consistent. Bitcoin’s average return in 2020, 2016, and 2012 was +192%. This could lift Bitcoin to the $125,000 target we set in July 2023 based on the “one-year high” indicator. Likewise, U.S. stocks tend to perform strongly in U.S. election years, with the only two declines since 1960 (-60 years ago) being in 2008 (-37%) and 2000 (-9.1%).

Surprisingly,Bitcoin funding rates remain high during the holidays, suggesting crypto trading Investors remain very optimistic and expect the Bitcoin ETF to be approved soon. With the Bitcoin dominance indicator falling to 50.3%, we are about to enter altcoin season, when the cryptocurrency market enters a beta rocket phase.

Bitcoin prices skyrocketed, and the funding rate exceeded 66% (annualized)

Although we did not see Tether's minting activity is increasing, which would indicate an inflow of fiat into the cryptocurrency, but the fact that the price is rising could indicate that there are no sellers in the market and the price is moving higher. This morning, funding rates hit a new high of +66%. This means longs pay shorts 66% per year to remain long.

This is how the futures market squeezes the spot market and could push Bitcoin to $50,000 by January 2024 Above the target level, this seems reasonably achievable. We could be trading over $50,000 by the end of the week.