Bankless: The next step for Bitcoin

Original title: Where Bitcoin Goes Next

Original article by Jack Inabinet

Original source: bankless

Compiler: Kate, Mars Finance

This is the new Bull Market for Bitcoin, but some big problems remain!

As 2024 begins, Bitcoin’s fundamentals seem to be as strong as ever, and crypto analysts are almost unanimously bullish on Bitcoin!

SpotBitcoin ETF approval deadline is next Wednesday, and industry insiders are optimistic that the introduction of these tools will pave the way for tens of billions of dollars to flow into Bitcoin in the coming years.

In addition, market participants are optimistic about the next Halving Halving, which will take place in April, which will reduce the BitcoinBlock subsidy for Inflation by 50% and, historically, will lead to a decrease in Miner sales, which will lead to a spike in Bitcoin prices.

While Bitcoin’s two different catalysts are enough to set the stage for Bitcoin’s price appreciation, next year’s rate cut is expected to be coveted by traders, who expect a more favorable macro environment to see Bitcoin break through all-time highs.

That being said, BitcoinBull Market reason hasn’t been shy lately. However, before you can unquestionably imitate Bitcoin to enjoy the huge gains that may occur in 2024, there are some important caveats to remember:

1. Requirements must be realized

Spot crypto ETFs are new to Americans, but these instruments already exist in Canada and Europe, where their adoption has been mixed.

Since late September, Canada’s Purpose SpotBitcoin ETF has increased its Bitcoin under management by 50% to 35,000, which is a respectable increase. Meanwhile, European publisher Jacobi has raised just $1.7 million in AUM since its launch in November.

Global investors face the same investment narrative as Americans, and their lack of demand for SpotBitcoin products may indicate that U.S. inflows may be less impressive.

For Bitcoin ETF approval to have an immediate positive impact, issuers must capitalize on the new demand from external investors seeking exposure to Bitcoin. However, it is unclear whether such a need exists.

In the long term, Bitcoin investment becomes easier and will be a bullish catalyst for the asset. However, if the ETF is approved and the resulting direct inflows are disappointing, the bulls may be trading in the wrong direction.

2. History just rhymes

Just because the previous Halving was bullish, it doesn’t mean that future Halving will be the same.

Just as the small reduction in Ether issuance after The Merge failed to change the price increase of Ether in the months that followed (the ETH/BTC ratio has decreased by more than 30% since then), the reduction in Bitcoin issuance after the Halving does not guarantee a positive impact on the Bitcoin price.

While reducing selling pressure by reducing block emissions will undoubtedly have a somewhat bullish effect on Bitcoin’s price, the impact of this Halving will be significantly diminished compared to before. Don’t be surprised if the expected pattern of appreciation after the Halving of Bitcoin prices doesn’t emerge.

3. Rate cuts don’t automatically bring favourable information

Many people confuse low Intrerest Rates with accommodative economic conditions, but they are only one macroeconomic factor.

All else being equal, lower intrerest rates do drop the desired rate of return and make venture capitals (such as Crypto Assets) appear more attractive. However, it is important to remember that interest rate cuts have historically been a monetary measure in response to economic deterioration.

Regardless of the asset class, the biggest risk for any investor is the market, and it’s unclear whether falling Intrerest rates will be enough to deal with an economy showing signs of recession.

Crypto Assets don’t exist during a prolonged economic contraction, and the peak in Intrerest Rates suggests that the worst recession is yet to come.

Source: Mars Finance Original