2023 turned out to be a great year for bitcoin, with the daddy of crypto’s 154% returns making it one of the year’s best-performing assets.
The gains could be attributed to two main events, only one of which has already played out. As the regional banking sector went into meltdown in the early part of the year, bitcoin was considered a hedge against a U.S. banking system that appeared to be in serious trouble. By becoming a safe-haven asset, in a sense, bitcoin fulfilled one of its main selling points, coming good on its promise to be an alternative to the traditional financial system.
Interestingly, and somewhat ironically, the other catalyst that has helped boost sentiment involves bitcoin finally being accepted by mainstream finance circles. Throughout the latter part of the year, bitcoin gained ground based on the premise that a Bitcoin Spot ETF is about to finally be approved, and that day of reckoning is almost here.
Cantor analyst Josh Siegler is a believer in the “long-term story of ongoing crypto adoption and Bitcoin’s staying power as an alternative asset.” Yet, as has been case throughout bitcoin’s relatively short history, near-term catalysts have often propelled the asset to higher levels.
“A Bitcoin Spot ETF approval is the most-important short-term catalyst for Bitcoin’s price, in our view, and we look forward to monitoring the SEC’s decision around the January 10, 2024 deadline,” the 5-star analyst explained.
Siegler’s expectation for a big move post the SEC’s decision is based on an analysis of prior moves. “Since 2012,” he said, “we found that government remarks & regulation was the most frequent short-term catalyst and accounted for 18 of the 65 days, or 28%, of material price movements.”
That worked both ways with government remarks & regulation offering both negative and positive catalysts, and ultimately cancelling each other out with an average one-day return of ~0%.
The second spot on the most-frequent catalyst list is reserved for fraud/hacks/illegal activities with 10 instances all naturally having an adverse impact, which on average saw bitcoin fall by 8% on such days. On the other hand, macro developments were usually responsible for the biggest positive one-day moves with “macro – risk on and scalability upgrades” driving the gains.
Near-term catalysts can come in various forms, but the other significant catalyst on the horizon usually has more of a long-term effect. The halving – an event written into the software, which reduces BTC mining rewards by half every four years or so – has historically been the catalyst for a Bitcoin bull market in each of its prior instances. The next one is scheduled for April, and as Seigler notes, it has the potential to once again drive higher once again.
“We believe 2024E will be full of important potential catalysts for Bitcoin, including the halving event and ongoing adoption trends,” Seigler summed up. (To watch Siegler’s track record, click here)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
