- Macro Hive analysts see ‘grey swans,’ or unforseen events that could affect the crypto industry next year.
- Dalvir Mandara and Bilal Hafeez investigate why and how Gensler leaving office would affect the market.
- They also look into the prospect of Bitcoin reaching a new all-time high, the Bitcoin halving event, and adoption of crypto.
Dalvir Mandara and Bilal Hafeez are financial analysts who advise hedge funds at research firm Macro Hive. Opinions expressed are their own and do not constitute financial advice.
The one certainty in markets is that there is no certainty.
It’s why we have an annual tradition of trying to predict the biggest shocks for the year ahead.
We call them grey swans — close cousins to black swans — that is, high-impact events that no one expects.
Bitcoin roaring back as an asset class for institutional investors and reaching all-time highs in price could be one of the biggest grey swans of 2024.
After all, many have given up on crypto markets thanks to the various shocks the industry has faced from the Terra Luna crash to the collapse of FTX.
Yet, Bitcoin has already been the stealth winner of 2023. It is up about 150% this year with its lowest ever volatility.
And here’s three reasons why Bitcoin could hit an all-time high in 2024.
Will SEC Chair Gary Gensler step down?
As the 2024 US presidential election draws near, the potential for political shifts, such as a Republican victory leading to a new administration, could result in significant changes at the Securities and Exchange Commission, a key federal agency.
On the other side, there’s growing discontent among Democrats regarding the pace at which SEC Chair Gary Gensler is advancing the agency’s climate risk proposal, which was introduced 18 months ago and has since faced increased pressure for finalisation.
Gensler’s tenure at the SEC has been marked by his cautious stance and stringent regulatory oversight of cryptocurrencies.
His approach has significantly influenced the SEC’s policies in this sector.
However, a change in leadership, whether due to Gensler stepping down or being replaced, might signal a shift towards a more cryptocurrency-friendly regulatory environment.
Historically, such regulatory changes have had a substantial impact on the cryptocurrency market.
Gensler’s departure could herald a new phase of acceptance and expansion for bitcoin.
Furthermore, the SEC’s position on crypto has global ramifications.
Should Gensler be succeeded by a leader more open to cryptocurrencies, it could set a precedent that influences international regulatory trends.
This shift might encourage other nations to adopt similar, more welcoming approaches towards the cryptocurrency industry.
More institutional adoption
With increased regulatory clarity comes increased institutional adoption.
On top of that, the recent bullish sentiment around spot Bitcoin exchange-traded fund filings have been adding to positive bitcoin momentum.
The approval of a spot Bitcoin ETF would allow regulated investors to gain exposure to bitcoin, which may result in billions of dollars’ worth of increased demand.
A spot ETF approval would open the doors to widespread institutional demand, which would be positive for Bitcoin.
Moreover, increased institutional demand could have a snowball effect and foster further innovation, such as more sophisticated trading infrastructure, standardised contracts, and clearinghouses, which would ultimately improve liquidity and reduce trading costs.
Bitcoin halving event to coincide with fed cuts
The Bitcoin halving event is predicted to happen in April 2024.
Historically, these halving events, which reduce the reward for mining new blocks, have led to a decrease in the supply of new Bitcoins, creating a supply shock.
Historically, Bitcoin’s price has shown a tendency to rise in the months leading up to and following a halving.
With a reduction in supply, a (relatively) small jump in demand (e.g., because of speculation around ETF approval) is all it takes to drive Bitcoin momentum higher.
Additionally, this time round, the halving event expected in April 2024 coincides with markets currently pricing the first Federal Reserve cut in March 2024.
The bottom line
Should events unfold as described in this note, the increased regulatory clarity, growing institutional adoption, and the upcoming Bitcoin halving event, coupled with the possibility of Fed cuts, means the stage could be set for a potential perfect storm for bitcoin in 2024.
These could easily see bitcoin gain 60%, which would be enough for it to surpass the all-time high of $67,734.
