Grayscale Predicts Positive Catalysts for Bitcoin Amid Spot ETF Approvals and Upcoming Presidential Election

According to Blockworks, Grayscale has identified several positive catalysts for bitcoin on the horizon, including potential spot bitcoin ETF approvals, the halving, and the upcoming presidential election. In a note summarizing November's price action, Grayscale's research team stated that the crypto recovery broadened to a wider array of market segments. Bitcoin has rebounded 130% in 2023 after a challenging 2022. Grayscale Research sees improving crypto fundamentals and a relatively tight supply picture in major tokens, which may be consistent with rising crypto valuations in the year ahead, especially if the Federal Reserve has finished tightening and the US economy can avoid a recession. The macro environment has been focused on whether the Federal Reserve and Chair Jerome Powell can ensure a soft landing for the US economy, ultimately avoiding a recession. A hard landing, however, would likely force the US into a recession, negatively impacting crypto recovery. Researchers believe that the central scenario for financial markets and the economy is likely to be positive for Bitcoin and other crypto assets. Bitcoin's supply is relatively 'tight' ahead of potential investor inflows into spot ETF products in the US. According to Glassnode data, the share of Bitcoin's supply held by short-term speculators reached a record low. The presidential election next year is expected to bring attention to excessive government borrowing and other issues, such as the Fed's independence, which would impact the US dollar. If this plays out, Grayscale expects that this combination would be positive for demand for physical and digital gold, and may be consistent with rising Bitcoin valuations. Bitcoin's hash rate hit an all-time high in November, which Grayscale believes is due to miners upgrading ahead of the 2024 halving. Open interest for bitcoin futures listed by CME also hit a high, possibly pointing to rising institutional activity in the market. Grayscale estimates that global crypto ETP net inflows hit $2.2 billion for the year, with November inflows totaling $1.3 billion. Stablecoins are also getting a boost from a more positive outlook, with aggregate stablecoin market capitalization increasing by $4 billion and the amount of gas used on stablecoin transactions moving higher.