21 reasons to be optimistic about Bitcoin in 2024

It is difficult to overstate how optimistic Bitcoin’s prospects are for 2024. Although many may feel it is too late (Why didn’t I get it for less than $100?), this may not have been the best time to jump in, as if it were a missed opportunity. More specifically, Bitcoin’s risk-to-potential reward ratio has never been more attractive. Supply, demand, perception, narrative, fundamentals; 2024 is expected to be a memorable year for us. In particular, here are 21 reasons why Bitcoin’s 2024 outlook is unusually optimistic.

demand

One. A multi-spot Bitcoin ETF is expected to receive SEC approval in the coming weeks, generating billions of dollars in additional demand as the asset becomes investable to institutions through traditional financial instruments. At the same time, ETFs are raising awareness of the assets, providing regulatory clarity, and support from major financial institutions. These expectations are evidenced by the discount at which Grayscale Bitcoin Trust (GBTC) trades against Bitcoin, declining from a nearly 50% discount last year to less than 10% in December 2023. Moreover, this issue has been shared by numerous analysts and asset managers close to it. Their expectations that Bitcoin ETF approval is imminent.

supply

2. The fourth halving of Bitcoin supply is scheduled for April, and the asset’s price action so far (+150% YTD) is consistent with the last three halving events, which yielded 101x, 30x, and 8x post-halving gains respectively . Halving supply means less downward pressure on the Bitcoin price. This is because miners can only sell half of the bitcoins they are currently selling each day (900 bitcoins per day). Additionally, Bitcoin’s stock-to-flow ratio suddenly doubles, triggering the next level of scarcity. Specifically, in April 2024, Bitcoin will make history by becoming the world’s scarcest asset (highest-flowing asset), taking this title from gold for the first time.

three. As more and more Bitcoin moves into wallets controlled by illiquid owners, liquidity supply is decreasing even faster. In particular, more Bitcoin is moving into private storage rather than being stored and traded on exchanges. Less liquidity supply means the multiplier effect of purchases increases. If a company purchases $1 billion worth of Bitcoin, Bitcoin’s market capitalization will increase by more than $1 billion. Because this purchase affects the price increase.

regulation

4. FASB, the body that sets accounting and financial standards for U.S. corporations, voted to adopt fair value accounting for Bitcoin in September 2023. This change means that businesses can hold Bitcoin on their balance sheets at market price, thereby recognizing unrealized gains rather than treating Bitcoin as an intangible asset and following an impairment model. This is an important development as it opens up the possibility for companies to increase their reported profits and capital when their Bitcoin holdings are valued. This change makes holding Bitcoin more attractive for businesses, not only because it could demonstrate more favorable financial outcomes when Bitcoin rises, but also because FASB’s move could be seen as legitimizing Bitcoin as an asset class.

5. The Satoshi Action Fund, a US non-profit educational organization, expects that 10 US states will pass Bitcoin-friendly regulations in 2024, in addition to the development of Bitcoin-friendly regulations in 2023. Increasing consumer confidence and promoting entrepreneurship in the Bitcoin space further increases demand and potential for the asset.

basic

6. Adoption is growing as the number of addresses containing one full Bitcoin is now at an all-time high. Similarly, addresses exceeding 0.1 Bitcoin and addresses exceeding 0.01 Bitcoin also reached all-time highs.

7. Bitcoin’s hashrate has now reached an all-time high of 500EH/s, reinforcing its status as the most secure network of all time.

8. On the other hand, Bitcoin’s volatility is trending downward in line with the asset’s maturity. An asset’s low volatility is especially important for investors looking at volatility versus return (e.g. Sharpe ratio or Sortino ratio). High yields and relatively low volatility make Bitcoin attractive to investors.

9. Additionally, Bitcoin’s correlation with traditional asset classes has fallen to an all-time low. Its low correlation with other asset classes makes Bitcoin a very attractive addition to traditional investment portfolios (e.g. hedge funds, pension funds, family offices). Because it allows asset managers to increase expected returns while lowering the volatility of their portfolios.

10. The decentralization of Bitcoin mining activities is expected to increase. For example, thought leaders like Jack Dorsey are investing millions of dollars in a decentralized Bitcoin mining pool called OCEAN. It may be a small investment so far, but this move will at least draw attention to the issue and encourage other miners to follow suit. Making the protocol more decentralized reduces risk, making it more valuable.

11. Layer 2 solutions (e.g. Lightning Network) are finally becoming scalable, allowing Bitcoin to be used as a medium of exchange. This means instant, virtually commission-free transactions are now possible. Lightning adoption in particular has increased tenfold since the summer of 2021. With these new features, Bitcoin as an asset in 2024 will be significantly different and superior to Bitcoin as an asset in previous years.

12. Bitcoin balances on exchanges are decreasing as people understand the importance of self-management. Personally, I see these developments as a sign of less speculation in the markets and more practical use of assets that act as decentralized stores of value.

13. In November 2023 we achieved another new record. Over 70% of Bitcoin has not moved in a year. And this development occurred despite the price of Bitcoin more than doubling during that period. Again, this record supports the theory that speculation in assets is declining as it is replaced by long-term holding.

story

14. The narrative around Bitcoin as an ESG asset is finally starting to be recognized and take hold. From banking the unbanked to mitigating methane emissions, encouraging renewable energy production and stabilizing the power grid. Peer-reviewed publications and traditional media are increasingly covering this aspect of Bitcoin, which is likely to spark further public interest in the asset.

15.Traditional investment managers have recently become supportive of Bitcoin. One of the biggest developments of 2023 is Larry Fink’s 180-degree turn on Bitcoin. Having called Bitcoin a “money laundering index” in 2017, he now vocally supports it and sees its recent price rise as a “flight toward quality.” As CEO and Chairman of Blackrock, the world’s largest investment firm, his opinions will hardly go unnoticed. Likewise, Jurrien Timmer, global macro director at Fidelity, sees it as a “hedge against currency depreciation” and “exponential gold.”

16.The differences between Bitcoin and all other cryptocurrency assets are becoming increasingly clear. One is a commodity (an asset without an issuer), while virtually all other assets are securities (not truly diversified assets). Bitcoin’s unique position will be highlighted once again, as upcoming regulations are likely to support this position.

Consciousness

17.El Salvador, where Bitcoin is the fiat currency, received an upgraded credit rating from S&P in November 2023, highlighting the early success of its Bitcoin strategy. Additionally, in December 2023, the value of the country’s Bitcoin investment turned positive for the first time, two years after Bitcoin accumulated during the longest bear market the asset has ever experienced.

18. Moreover, in November 2023, a liberal economist who supports Bitcoin was elected president in Argentina. Javier Millay’s video is already going viral as he condemns the vices of socialist economics and fiat currency. For example, an interview with Tucker Carlson conducted in mid-September 2023 is one of the most viewed videos on Platform X, with already over 400 million impressions.

19. Several US presidential candidates have pledged to make Bitcoin a topic in the 2024 election. Specifically, prominent pro-Bitcoin candidates for the highest positions in the United States include Ramaswamy, Kennedy, and DeSantis. The debate will put Bitcoin at the forefront and force all candidates to take their own stance on the issue.

beyond that

20. The November 2021 Taproot upgrade integration of the Bitcoin protocol will allow smart contracts to be implemented directly on the Bitcoin blockchain. Taproot not only simplifies transaction efficiency, but also opens up the potential for functions such as complex contracts to be executed directly on the Bitcoin network, providing the benefits of decentralization, security, and robustness. These developments open up a new realm of possibilities for decentralized finance (DeFi) and other applications. These developments will begin to emerge in 2023 and could be significant milestones in 2024.

21.In the coming wave of Bitcoin adoption, it may become clear that Bitcoin is more than just money. For example, when American Major Jason Lowery released his best-selling book software Earlier this year, it raised awareness of Bitcoin’s potential far beyond currency and financial markets. In particular, Bitcoin’s security can be utilized not only for financial information but also as a cybersecurity protocol, which can be a strategic imperative for the national security of any country. As Hal Finney posted on December 5, 2010, “Bitcoin is a global, decentralized, yet consistent database,” he encouraged readers to consider various applications for such a database. This idea is still in its infancy, but the seed has been sown and an incredible vision is growing. No one knows the date of the harvest, but when it comes, it is expected to usher in an era of unprecedented innovation and prosperity.

As 2023 approaches, Bitcoin’s landscape presents a confluence of promising developments, each contributing to a strong and optimistic outlook for the year ahead. From the expected influx of institutional investment to landmark regulatory changes and Bitcoin’s fourth halving milestone, the stage is set for significant growth and widespread adoption.

Additionally, the evolving perception of Bitcoin as a safe, decentralized asset and the growing recognition that it is an environmentally and socially responsible choice highlight its potential to transcend its current role in the financial landscape. The passionate embrace of global leaders and innovative advancements in technology only enhance the story of progress and potential.

Each of these 21 reasons is not only strong on its own, but intertwined with the others to create a tapestry of interdependent factors that collectively strengthen Bitcoin’s position in the global economy. 2024 promises to be a pivotal year in Bitcoin history, one that will cement its place in the annals of economic history. The future is bright orange, and now is the time to take notice.

Thomas Zegers

Vienna, December 5, 2023

This is a guest post by Thomas Jeegers. The opinions expressed are solely personal and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.