The price of bitcoin has skyrocketed in 2023, increasing by more than 160 percent to levels not witnessed since the latter half of 2021. This strong rally, however, might be the beginning of something even greater, according to the genuine crypto believers.
Some believe that Bitcoin, the leading cryptocurrency, is about to see a confluence of events that might catapult it into the mainstream of finance within the next year, as it aims to surpass the $1 trillion total market cap achieved by just four publicly traded firms in history.
Here is the bullish argument for why Bitcoin still has space to run before hitting the big one trillion, in case normal investors are wondering if they’ve missed the wave. Early adopters stand to gain considerably more than that, with the potential for 1 BTC to reach over $500,000 if all goes according to plan.
Halving Day Approaches: Built-In Supply Shock Could Spark FOMO
April 2024 is the first significant date that crypto enthusiasts have marked on their calendars. It is the date of Bitcoin’s next “halving” occurrence. I don’t understand.
The incentive that Bitcoin miners earn for safeguarding the network is cut in half every 210,000 blocks, which is approximately every four years. A software-integrated system to automatically increase Bitcoin’s price, this halves the supply of new Bitcoin entering the market.
The biggest massive bull runs in Bitcoin history have always been preceded by halvings. The coin’s value increased by more than 8,000% and 2,50% after the 2012 and 2016 halving days, respectively, due to the confluence of rising demand and falling supply.
The second halving is almost here, and many are predicting that the months leading up to and following the supply squeeze will see Bitcoin prices explode, just as in the past.
The recent 25% monthly rise is fueled by investors’ and traders’ anticipation of the kickoff, which has caused them to pour in.
SEC Ruling Could Unleash Wall Street Investment Flood
The next impetus will most likely come from the Securities and Exchange Commission (SEC), which is anticipated to approve a spot Bitcoin ETF soon.
Bitcoin is the underlying asset in this situation, and the value of these ETFs is derived from that asset. Investors on Main Street may benefit from cryptocurrency price fluctuations without really owning or managing Bitcoin if a spot Bitcoin ETF were available.
Big names in finance like BlackRock, Ark Invest, and Invesco have rushed to get the go-ahead so they can be the first to market. According to sources close to the SEC, Bitcoin’s development and maturity over the past few years have made acceptance very likely in early 2023, if not sooner.
This has the potential to unleash a massive influx of funds. Over $1.2 billion in assets under management were brought in within two days of the first Bitcoin futures ETF being authorized last year.
Bitcoin values could skyrocket overnight if a physically-backed spot ETF were to emerge.
Inflation Data Gives Fed Room to Pivot
Inflation is beginning to peak, which is good news for Bitcoin and other macroeconomic indicators. The most current Consumer Price Index data fell to 7.7 percent, a positive development after a previous reading of more than 8 percent.
By mid-to-late 2023, the Federal Reserve may be able to cut interest rates after gathering evidence that aggressive rate hikes are controlling soaring prices across the economy.
Capital would be free to reinvest in risky assets like bitcoin if interest rates were to drop and monetary policy was to be looser. As the post-halving hype cycle fades, Bitcoin has a great chance of attracting a large portion of this newfound liquidity.
When Billionaires Back Bitcoin
As a corollary, widespread support is suggested by mainstream endorsements. Billionaires like Paul Tudor Jones and Bill Miller have reiterated their support for Bitcoin as a means to protect themselves from inflation this year.
Miller shocked the CNBC hosts when he said that any investor may think about holding half or even 60% of their money in the coin. Institutional Bitcoin holdings have tripled since 2020, suggesting that the smart money is in agreement.
Critics also warn that the global elite is progressively cementing their control over cryptocurrency, which was once the domain of individual investors, as billion-dollar endowments like Brown, Harvard, and Yale all took large Bitcoin investments in 2022.
However, reaching the trillion-dollar barrier may indicate that Bitcoin’s greatest days are still to come, leaving everyday investors to worry if they’ve missed the wave.
Quest for $1 Trillion: What Could It Mean for Prices
When Bitcoin first appeared on the market more than ten years ago, not many people gave it a second thought. Therefore, the notion that it might compete with the world’s megacaps would have appeared implausible.
Based on current gold prices and Bitcoin circulating supply, the implied market cap of Bitcoin would have to increase tenfold, reaching $5-10 trillion, if it were to capture even 20% of the value of gold — a possibility that some models say may be achieved by 2030.
Along the road, we can reach a total worth of $1 trillion with a relatively small gain of 20% from where we are today. If the network value reaches the price (which is now at 50%), Bitcoin hodlers might see a price of over $500,000 per coin.
Bitcoin reaching seven figures this decade suddenly appears less like a fantasy as institutional backing continues to surge, and all eyes are on six-digit projections.
A person’s money can vanish in an instant in an asset as unpredictable as this one, thus investing based on expectations of future returns alone is very dangerous.
Keep in mind that Bitcoin’s original intent was to provide a decentralized, alternative monetary system that could function independently of governments and banks.
Regardless of your belief in its lofty goals, it is crucial for everyone contemplating making a purchase to maintain perspective during these intense times.