Bitcoin Analysis: Why 2024 Will Be The Highest Returning Year This Cycle
September 08 2023 - 3:10AM
NEWSBTC
In a recent comprehensive report by Capriole Investments, Charles
Edwards presents a compelling case for why 2024 will be a pivotal
year for Bitcoin, potentially offering the highest returns in its
current four-year cycle. The report delves into multiple facets of
Bitcoin’s future, including its role as an inflation hedge, the
upcoming Halving event, and the impact of imminent ETF approvals. A
Confluence Of Catalysts For Bitcoin Edwards begins by addressing
the skepticism surrounding Bitcoin’s performance as an inflation
hedge. “Bitcoin gets a hard rep for its performance coming out of
2021 amidst growing inflation,” he notes. Contrary to popular
belief, Edwards asserts, “Bitcoin was a great inflation hedge – it
was when it needed to be.” Related Reading: Bitcoin Drop Before
Halving Expected, Will It Get Worse In September? He emphasizes
Bitcoin’s impressive 1000% rise from Q1-2020 to Q1-2021, outpacing
all other asset classes. This surge, he explains, was a direct
response to the Federal Reserve’s multi-trillion-dollar QE packages
announced in March 2020. “Markets today move incredibly fast and
are forward looking. As soon as macro announcements are made, the
pricing-in begins,” Edwards states. Drawing a comparison between
Bitcoin and traditional hedges, Edwards points out that Bitcoin’s
performance during the liquidity boom was unparalleled. “There is
no doubt that Bitcoin dominated the crisis as the best inflation
hedge,” he asserts, adding, “There is no second best. Bitcoin was
the greatest inflation hedge we have ever seen.” The second crucial
catalyst for Bitcoin is the upcoming halving in April 2024. Edwards
highlights the gravity of this event, stating, “The upcoming
Bitcoin halving in April will drop Bitcoin’s supply growth rate to
0.8% p.a. and below that of Gold (1.6%) for the first time ever.”
This means that “In April 2024, Bitcoin will for the first time
become harder than Gold.” Addressing the common argument that the
Halving is already priced in, Edwards counters, “If there is one
thing we have learnt from Bitcoin’s past it’s that the halving is
never priced in.” He argues that 80% cycle drawdowns reset all
interest in Bitcoin. Furthermore, Edwards draws parallels to
previous cycles, noting that many on-chain metrics indicate that
the current cycle mirrors those of 2019 and 2015 exactly. Third,
Edwards also touches upon the regulatory landscape, highlighting
the clarity brought about by the CFTC’s classification of Bitcoin
as a commodity in 2021. He also mentions the significant
announcement of Blackrock’s Bitcoin ETF application and the federal
appeals court’s order for the SEC to reconsider its rejection of
the Grayscale spot ETF. His base case expectation is that the SEC
will approve the spot ETF either in October 2023 or January 2024.
Related Reading: JPMorgan Adjusts Bitcoin’s Production Cost: What
This Means For BTC And Its Miners? Discussing the potential impact
of ETFs on Bitcoin, Edwards draws a parallel to Gold, noting the
significant bull run that followed the approval of the Gold ETF in
2004. “When the Gold ETF approval hit, what followed was a massive
+350% return, seven-year bull-run,” the analyst remarked, adding,
“so, we have three incredible catalysts on the very near horizon,”
he states, listing the upcoming halving, imminent ETF approvals,
and Bitcoin’s status as the best inflation hedge. In conclusion,
Edwards presents a bullish yet cautious outlook. While he
acknowledges the short-term bearish signals, he remains optimistic
about the long-term prospects. “In Bitcoin’s four-year cycles,
there’s typically 12-18 months where 90% of returns happen,
followed by 2-3 years of sideways and down,” he observes, adding,
“I am expecting that the single highest returning year of this
cycle will be 2024 and I believe the data supports that thesis.” At
press time, BTC surged to $26,246, up 1.8% in the last 24 hours.
Featured image from iStock, chart from TradingView.com
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