Analysts at Matrixport suggest that by the end of this week, the leading cryptocurrency could trade above $50,000.
The primary drivers of this digital gold price increase include:
- the potential approval of spot Bitcoin ETFs in the US;
- demand from financial institutions;
- a shortage of coins available on the market.
Institutional FOMO
“Institutional investors cannot afford to miss another potential rally. Therefore, they must buy immediately when markets open for trading in 2024. We anticipate an immediate rally that will once again catch investors off guard,” the specialists predicted.
They believe that regulators could announce the approval of new exchange products “today or tomorrow, ahead of most investors’ expectations.” This would serve as a powerful factor in boosting the price of the leading cryptocurrency.
At the end of December, companies such as BlackRock, VanEck, Valkyrie, Fidelity, WisdomTree, Bitwise, Franklin Templeton, Invesco and Galaxy submitted final amendments to their spot Bitcoin ETF applications to the US Securities and Exchange Commission (SEC).
Supply Shortage
Following a series of bankruptcies and the collapse of FTX in 2022, many holders of digital gold withdrew funds from centralized platforms, meaning that “$5-10 billion in fiat money may not find enough bitcoins on exchanges.” Experts noted that 70% of issued BTC remains dormant in cold wallets, creating a supply shortage of the leading cryptocurrency.
Among other positive factors, experts cited the more “dovish” actions of the US Federal Reserve and the expected halving in April, which will make the leading cryptocurrency an even rarer asset.
Historical Data and Other Factors
Experts pointed out that the average return on Bitcoin investments in the years of previous block reward halvings (2020, 2016, and 2012) was around 192%. Considering this, the price of digital gold could reach $125,000 by July.
Additionally, the funding rate for Bitcoin-based derivatives remained high during the holidays. This indicates optimism among crypto traders regarding the potential approval of new financial products in the US in the coming days.
“While we do not see an increase in Tether issuance, which could signal an inflow of fiat into cryptocurrencies, the price rise may indicate a lack of sellers in the market,” the specialists concluded.
Earlier today, ForkLog reported that Bitcoin’s price broke through the $45,000 level amid a surge in trading volumes.
The last time digital gold traded at such high levels was in early April 2022, before the Terra collapse and the subsequent “contagion” in the crypto industry.