Notable Narratives and Upcoming Events to Follow Involving Bitcoin (BTC)
By the account of just about every trader and analyst, Bitcoin (BTC) has officially escaped its bear market and is now on a long-awaited upswing in price, sentiment, and various other metrics. With that being the case, the coming months – and potentially years – should prove to be quite an exciting time to see what the next phase of adoption looks like for the world’s top digital asset.
While there is no way to plan for any and every development, there are a few notable events set to occur in the coming year that every Bitcoin enthusiast should be aware off, as each has the potential to fuel momentum behind BTC (and not necessarily in an upwards direction). Below is a look at a few of these events, and what they may mean for the market.
Mt. Gox Reimbursement
One of the first events set to potentially play a role in the price and sentiment surrounding Bitcoin is the pending distribution of funds recovered from the collapse, roughly 10 years ago, of the once-popular exchange Mt. Gox.
This event is particularly notable, as it is also one of the more polarizing. While events like the halving are exclusively seen as positive, this distribution of funds has the potential to act as an anchor on the price of BTC if recipients opt to offload their assets. With roughly ~140,000 BTC and an equivalent amount of Bitcoin Cash (BCH) set to be released to over 10,000 accounts, this represents a huge influx of previously inaccessible BTC that may be sold on exchanges.
Interestingly though, there are those that think this event will amount to nothing, expecting many of the creditors to continue holding their long-lost BTC, making those that do choose to sell ‘white noise’ set to be absorbed by the market without any real effect.
Then there is the Bitcoin Cash component – a factor not often discussed. Creditors of Mt. Gox owed BTC are from a time when BCH did not exist. While they are entitled to BCH stemming from its creation through a hardfork in 2017, this is not a project that they ever bought into. So the question is – will they continue holding BCH? Or will it be Bitcoin Cash that suffers as creditors offload the asset, potentially buying back BTC in the process and negating any selling pressure on Bitcoin itself?
With the scale of this event, and the uncertainty surrounding its expected effect on the digital asset market, the Mt. Gox situation is most definitely one that is worth tracking in the coming months. Repayment/distribution of funds is currently set to occur before Nov. 1, 2023.
Ripple Vs. SEC
For quite some time now, Ripple has been locked in a courtroom battle with the Securities and Exchange Commission (SEC). Among the various charges put forth by the SEC are allegations that XRP was/is an unregistered security.
Depending on the outcome of this case, which is expected to be resolved any time now, it may actually prove to be a boon for the price of BTC. If XRP is deemed a security when sold on secondary markets, it bodes very poorly for a plethora of digital assets that were structured and distributed in a similar manner. If this comes to pass, some expect that there will be an exodus of capital from affected altcoins that may flow back into Bitcoin – potentially boosting the price of BTC along the way.
ETF Applications
The current strength and size of the digital asset market were built largely on the backs of retail investors over the course of nearly 15 years. During all this time, the vast majority of investing capital has remained on the sidelines as institutional investors awaited more efficient and regulated means of gaining exposure to the market as it matured. Based on recent activity, it now appears as though that day has arrived, with a variety of investment firms representing roughly $27 trillion in assets under management ready to join the fray. The following are a few examples of the names now willing to put their name and reputation behind Bitcoin.
- Blackrock
- Fidelity
- Vanguard
- ARK Invest
Despite various examples of Bitcoin ETFs being established in countries like Canada in recent years, the reality is that the economies in which these are available are a drop in the bucket compared to the United States. With the entire digital asset sector valued at roughly ~$1.2 trillion, investors are unsurprisingly excited about what the entrance of institutional capital may mean for the price of BTC at a time when demand is rising, and supply is dwindling.
Not everyone is excited for institutional capital entering the market though. While the distribution of funds from Mt. Gox is polarizing due to its potential effect on the price of BTC, the launch of an ETF-like investment vehicle by players like Blackrock is polarizing due to the straying from Bitcoin’s original ethos, which promotes self-custody and reduced counterparty risk among other things.
Interestingly, each of the aforementioned applications has named Coinbase as their exchange of choice for spot-market price referencing. This has resulted in Coinbase (COIN) shares spiking, despite an ongoing lawsuit of its own with the SEC.
Halving
Without a doubt, the next Bitcoin ‘halving’ is the most anticipated and noteworthy event for multiple reasons.
- While the entrance of institutional capital through ETF-like products may be market-moving, approval of these products are by no means a sure thing. The halving however WILL occur on schedule.
- Even if an ETF-like product is approved in the United States, there is no data to look back upon as a point of reference to say that it will be positive, as there has yet to be one approved in the world’s largest economy. There is a possibility that a BTC Trust or ETF could launch to a muted response. On the other hand, halving events (which occur every ~4 years) have proven to be wildly positive events for the network since inception, coinciding with each bull market to date.
- It is the event that has the greatest impact on the most important players within the Bitcoin ecosystem – the miners.
Why are miners the most important? Miners are what make the network decentralized. Miners are responsible for Bitcoin’s unmatched network security and reliability. Miners are responsible for adding blocks comprised of transactional data to the Bitcoin blockchain. Unlike other network participants, miners are directly affected by the halving as the BTC awarded for their hard work is literally cut in half, essentially doubling their costs in an instant. With this being the case, the BTC sold by miners to fund operations will now need to be offloaded at a much higher price, pulling the entire market up with it over the months to follow.
This particular halving is expected to be especially bullish for BTC due to its timing. This is the first halving to occur with Bitcoin truly on the cusp of becoming a mainstream asset. It is also occurring at a time when other factors such as potential ETF-like product approvals will be exerting their own upwards pressure on order books, further skewing supply/demand for BTC. At the very least, the coming halving is expected to influence BTC similar to past occurrences. In another scenario, it may dwarf past occurrences as its effects are amplified by mass adoption.
The next Bitcoin halving is expected to occur around mid-April, 2024.
The Unforeseen
Outside of the aforementioned known events set to occur, there are various which may soon take place that also play a large role in the direction of the market. Namely,
- Further adoption of BTC among company treasuries
- Support for BTC payments at major retailers/apps
- Shifting tide on inflation data
With regard to these points, we have already seen MicroStrategy adopt a BTC-based treasury, there have been rumblings for ages that Twitter may soon integrate BTC into its platform, and CPI data from the United States shows a steadily falling rate of inflation. These examples are not enough on their own to shift the BTC market though. Only once they are expanded upon will they prove to be events as notable as the pending halving or a potential ETF-life product.
Commentary on Expected Price Movements
With all of these events set to occur in the coming year, what does it mean for forecasts being made by onlookers and industry participants? In a recent look at the performance of Bitcoin, multinational bank Standard Charter shared its opinion that the market can expect to see BTC valued at $50,000 in 2023, and $120,000 in 2024.
Greg Moritz, Co-Founder at AltTab Capital, recently commented on these predictions, stating,
“While there can be no guarantees when it comes to price movement, Standard Chartered’s bullish expectations are in line with ours. When looking at the historical price action of Bitcoin, it tends to move in a 4 year cycle with year 1 (2022) having 70-90% crashes, followed by strong growth in the following 3 years. Next year will be the Bitcoin “halvening”, a programmed occurrence in which the rate of new Bitcoins being produced is reduced by half, increasing scarcity. As scarcity increases and demand grows, assets generally rise in price. Further, the recent ETF filings give even more reason to be bullish as they represent the potential for massive capital inflow to the space. Finally, we’ve seen a very large uptick in interest from institutional capital, and when the smart money is getting into an asset class, it’s because they too see the potential for strong growth.”
Bradley Duke, Founder and Chief Strategy Officer at ETC Group, comments,
“While predicting the timing of market moves is always tricky, the case for a significant increase in the price of Bitcoin in the foreseeable future is clear. The supply-side of the equation remains famously fixed: the total amount of bitcoin is hard-capped at 21 million bitcoin, but the current news flow suggests that the demand-side is set to increase significantly. With Blackrock filing for a spot Bitcoin ETF in the US, given their past success rate, the belief is that this application is likely to be approved. This will enable massive pent-up demand for Bitcoin in the US and elsewhere to finally be able to flow into the market, and it’s logical that the price of Bitcoin respond in a proportionate manner.”
Final Word
Bitcoin has many enticing attributes and use cases that have allowed it to become what it is today. Fidelity Digital, recently highlighted one of the main reasons it sees an appeal behind BTC, stating,
“Simply put, Bitcoin’s monetary policy is not dependent on or impacted by politics or external economic factors”.
At a time when world economies are still reeling with inflation, increased cost of living, and a litany of other uncertainties, the draw towards a digital currency that operates on a global scale outside of the whims of any one government is only growing.
Overall, while detractors of Bitcoin will always remain, it is getting increasingly difficult to hear them when looking at what is on the docket for BTC over the coming year.