As we bid farewell to 2023, Bitcoin stands as the reigning champion of digital assets, capping off a remarkable year with a nearly 150% return – a performance reminiscent of its extraordinary 305% surge in 2020. With a backdrop of this success, we delve into the crystal ball to share five intriguing predictions for Bitcoin and the digital asset landscape in the upcoming year. It’s important to note that these predictions are personal insights and do not necessarily align with the views of U.S. Global Investors.
1. The Rise of U.S. Spot Bitcoin ETFs: A Catalyst for Price Revaluation
The anticipation is palpable as the possibility of a U.S.-based spot Bitcoin ETF looms on the horizon. Bloomberg Intelligence suggests a 90% likelihood of the Securities and Exchange Commission (SEC) greenlighting a filing by January 10, potentially paving the way for a flurry of Bitcoin ETF launches in January, with estimates as high as 10. If realized, the impact on the underlying asset could be substantial. While spot Bitcoin ETFs already exist in other markets, the sheer size of the U.S. market, constituting about 60% of the global equity market value, could fuel demand, propelling Bitcoin’s price to a range of $50,000 to $73,000, according to some analysts. Drawing parallels with the gold market’s response to the introduction of the first U.S.-based gold commodity ETF, the SPDR Gold Shares (GLD) sheds light on the potential transformative effect of a spot Bitcoin ETF.
Spot Ethereum ETFs may also make waves in 2024, pending SEC decisions on filings from VanEck and Ark/21Shares expected in May.
2. Survival Struggles for Smaller Miners Post-Halving
Bitcoin’s predetermined scarcity is maintained through halving events, and the upcoming halving in April 2024 will see the mining reward reduced by 50%, from 6.25 BTC per block to 3.125 BTC. While historical trends indicate price rallies around halving events, smaller and less capitalized miners may need help in sustaining operations. The increasing difficulty rate and reduced mining rewards may trigger industry consolidation, as witnessed in the recent merger of crypto miners Hut 8 and U.S. Bitcoin Corp. The industry is poised for strategic maneuvers as it adapts to the evolving landscape of mining difficulty.
3. The $84 Trillion Wealth Transfer: A Windfall for Digital Assets
The following two decades promise the most significant wealth transfer in human history, with an estimated $84.4 trillion flowing from the Silent Generation and Baby Boomers to Millennials. Notably, Millennials exhibit a higher preference for digital assets, driven by their status as digital natives and a history of financial setbacks. This substantial wealth transfer is anticipated to channel significant inflows into Bitcoin and the broader crypto asset class as younger generations seek alternative investments beyond traditional financial instruments.
4. NFTs and Ordinals: A Resurgence in the Digital Collectibles Arena
Non-fungible tokens (NFTs) experienced a surge in popularity during the bull run of 2021-2022, but many have since lost value. However, there are signs of a potential NFT renaissance, with Bitcoin emerging as a preferred platform for digital collectibles, known as “ordinals.” The Bitcoin blockchain has witnessed a surge in daily transactions involving ordinals, accounting for over half of all transactions. This trend suggests a renewed interest in digital collectibles, with the Bitcoin network establishing itself as a formidable player in the NFT space.
5. Bitcoin Miners as Energy Stewards: Addressing Environmental Concerns
Despite frequent critiques of Bitcoin mining for its energy consumption, the sector is actively progressing towards sustainability. A noteworthy percentage of the energy used in Bitcoin mining is derived from renewable sources such as hydroelectric, wind, and solar power. Additionally, data from the Bitcoin Mining Council indicates that, by the first half of 2023, the global Bitcoin network’s energy consumption constituted a mere 0.21% of the world’s total energy consumption. The inventive utilization of stranded gas, a byproduct of oil and gas operations, further underscores the industry’s dedication to environmental stewardship. This approach not only offers financial benefits to miners but also presents an environmentally conscious solution to address concerns related to energy consumption in Bitcoin mining.
As we approach 2024, these forecasts provide insight into potential developments that may influence the course of Bitcoin and digital assets in the upcoming year. Acknowledging the inherently dynamic and unpredictable nature of the crypto landscape, these insights serve as contemplative reflections as we navigate the continually evolving spheres of blockchain and digital finance.
