21 Reasons Why You Should Be Bullish on the Bitcoin Market in 2024

The outlook for Bitcoin in 2024 can’t be overly optimistic. While many may feel like they’re too late (why didn’t I buy under $100?), it may not be a better time to get in on the action. , as if they missed their chance, now may not be a better time to get involved. More specifically, the ratio of potential returns to the risk behind Bitcoin has never been more attractive. Here are 21 reasons to be extraordinarily optimistic about Bitcoin’s 2024 prospects.

Demand
1. Multiple spot bitcoin ETFs are expected to receive SEC approval in the coming weeks, creating billions of dollars of additional demand as institutions can invest in the asset through traditional financial products. At the same time, ETFs are raising awareness of the asset and providing regulatory transparency as well as support from major financial institutions. This expectation is evidenced by the declining discounts that Grayscale Bitcoin Trust (GBTC) is offering relative to Bitcoin transactions, dropping from nearly 50% last year to less than 10% by December 2023.1 The ETF’s ability to offer a discount to Bitcoin trades has been a key factor in the growth of the ETF. Additionally, countless analysts and asset management firms close to the matter have shared this view – their anticipation of an imminent approval of a spot Bitcoin ETF.

Supply
2. The fourth halving of Bitcoin supply is set to arrive in April, and so far the asset’s price action (+150% year-to-date) has been consistent with the previous three halving events, which have yielded 101x, 30x, and 8x, respectively. Halving the supply means that the downward pressure on the Bitcoin price will fall, as miners will sell half as many Bitcoins per day as they currently do (900 Bitcoins per day). It also triggers the next level of scarcity, as the ratio of bitcoin stock to traffic will suddenly double. Specifically, history will be made in April 2024 as Bitcoin will become the world’s scarcest asset (the asset with the highest stock-to-flow ratio), replacing gold for the first time.

3. the supply of liquidity declines even faster as more bitcoin moves into wallets controlled by illiquid owners. Specifically, more bitcoin is moving to private custody rather than being held and traded on exchanges. A decrease in the supply of liquidity means an increase in the multiplier effect of purchases: when an entity purchases $1 billion in Bitcoin, the market capitalization of Bitcoin increases by more than $1 billion because this purchase affects the price upward.146 The market value of Bitcoin is also increasing.

Regulation
4. The FASB, the entity that sets accounting and financial standards for U.S. companies, voted in September 2023 to adopt fair value accounting for Bitcoin. This change means that companies can hold Bitcoin on their balance sheets at market price, allowing them to recognize unrealized gains without having to treat it as an intangible asset and follow an impairment model. This is a significant development as it opens up the possibility for companies to increase their reported earnings and equity as their bitcoin holdings appreciate in value. This change makes holding Bitcoin more attractive to companies, not only because they can show more favorable financial results when Bitcoin rises, but also because this move by the FASB can be seen as legitimizing Bitcoin as an asset class.

5. In addition to regulatory progress in support of Bitcoin in 2023, the Satoshi Nakamoto Action Fund, a U.S. nonprofit educational organization, expects to pass pro-Bitcoin regulations in 10 U.S. states in 2024. Greater regulatory clarity will increase institutional investment , boost consumer confidence, and stimulate entrepreneurship in the Bitcoin space, further increasing demand and potential for the asset.

Fundamentals
6. As the number of addresses with 1 full Bitcoin has reached an all-time high, adoption rates have increased. Similarly, addresses with more than 0.1 bitcoins and addresses with more than 0.01 bitcoins are also showing the highest levels ever.

7. Bitcoin’s arithmetic power has now reached an all-time high of 500 EH/s, solidifying its position as the most secure network ever. 8.

8. In contrast, Bitcoin’s volatility is trending downward as the asset expires. The low volatility of an asset is particularly important for investors concerned with the ratio of return to volatility (e.g., the Sharpe ratio or the Sortino ratio). Bitcoin enhances its attractiveness to investors by virtue of its high rate of return and relatively low volatility.

9. In addition, Bitcoin’s correlation with traditional asset classes has fallen to historic lows. The low correlation with other asset classes makes Bitcoin an attractive addition to any traditional portfolio (e.g., hedge funds, pension funds, family offices), as it allows asset managers to reduce the volatility of their portfolios while increasing expected returns.

10. The decentralization of bitcoin mining activity is expected to increase. For example, thought leaders like Jack Dorsey have invested millions of dollars in a decentralized bitcoin mining pool called OCEAN. While this may be a small investment so far, the move at least puts the issue in the spotlight and invites other miners to follow suit. Further decentralization of the protocol could reduce its risk and thus make it more valuable.

11. Layer2 schemes (such as the Lightning Network) eventually become scalable, enabling Bitcoin to be used as a medium of exchange: virtually free, instantaneous transactions. Specifically, since the summer of 2021, adoption of the Lightning Network has increased tenfold. With this new capability, Bitcoin as an asset in 2024 will be very different (and superior) to Bitcoin as an asset in previous years.

12. Bitcoin balances on exchanges are declining as people understand the importance of self-custody. Personally, I see this development as a sign of less speculation in the market and a more authentic use of the asset as a means of decentralized storage of value.

13. in november 2023, we set another new record: over 70% of bitcoins have not moved in more than 1 year. This development occurred despite the fact that the price of Bitcoin more than doubled during this period. This record once again supports the theory that speculative activity in the asset is decreasing while being replaced by long-term holdings.

Narrative
14 The narrative around Bitcoin as an ESG asset is finally being recognized and is beginning to be addressed: from providing banking services to the unbanked to reducing methane emissions, incentivizing renewable energy production, and stabilizing the power grid. Peer-reviewed publications and traditional media outlets are increasingly covering this aspect of Bitcoin, which may further galvanize public interest in the asset.

15. Traditional investment managers have recently turned to Bitcoin. One of the biggest developments in 2023 is Larry Fink’s 180-degree turn on Bitcoin. From calling Bitcoin a “money laundering index” in 2017, he is now openly pro-Bitcoin and sees Bitcoin’s recent price rise as a “shift to quality. As CEO and chairman of BlackRock, the world’s largest investment firm, his views are hard to ignore. Similarly, Jurrien Timmer, Director of Global Macro at Fidelity, sees it as a “hedge against currency devaluation” and “exponential gold”. 16.

16. The distinction between Bitcoin and all other crypto assets is becoming increasingly clear: one is a commodity (an asset without an issuer), while almost all other crypto assets are securities (not truly decentralized assets). With upcoming regulation likely to support this position, Bitcoin’s unique position will once again be highlighted.

Cognitive
17 that Bitcoin is a legal tender in El Salvador, Standard & Poor’s upgraded its credit rating in November 2023, signaling the early success of its Bitcoin strategy. In addition, the value of the country’s bitcoin investment turned positive for the first time in December 2023, after the asset experienced its longest bear market of two years of bitcoin accumulation.  Bitcoin Miner

18. In addition, a liberal economist who openly supports Bitcoin was elected president of Argentina in November 2023. A video of Javier Milei has gone viral denouncing the evils of socialist economies and fiat currencies. His interview with Tucker Carlson in mid-September 2023, for example, is one of the most watched videos on the X platform, with more than 400 million views.

19. Several U.S. presidential candidates will make Bitcoin an issue in the 2024 election. Specifically, prominent candidates for the highest office in the U.S. who support Bitcoin include Ramaswamy, Kennedy, and DeSantis. These discussions will bring Bitcoin to the forefront and force all candidates to take a stand on the issue.

Beyond
20. in november 2021, the integration of the bitcoin protocol taproot upgrade allowed for the implementation of smart contracts directly on the bitcoin blockchain. the integration of the bitcoin protocol taproot upgrade allowed for the implementation of smart contracts directly on the bitcoin blockchain. Taproot not only simplifies transaction efficiency, but also unlocks the potential to execute complex contract-like functions directly on the Bitcoin network, benefiting from its decentralization, security, and robustness. This advancement opens up new possibilities for decentralized finance (DeFi) and other applications. Such developments will begin to emerge in 2023 and could become a major milestone in 2024.

21. In the coming wave of Bitcoin adoption, it may become clear that Bitcoin is more than just currency. For example, when U.S. Major Jason Lowery released his best-selling book Software Wars earlier this year, it raised awareness of Bitcoin’s potential far beyond currency and financial markets. Specifically, Bitcoin’s security could be used not only for financial information, but also as a cybersecurity protocol, which could become a strategic national security priority for all countries. As Hal Finney posted on December 5, 2010, “Bitcoin is a global, decentralized, and consistent database,” inviting readers to consider the many applications of such a database. While the idea is still in its infancy, the seeds have been planted and an extraordinary vision is growing. No one knows the date of the harvest, but when it arrives, it is expected to bring an era of unprecedented innovation and prosperity.Bitcoin mining

Conclusion
As 2023 draws to a close, the outlook for Bitcoin presents a series of promising developments, each of which offers a strong and optimistic outlook for the year ahead. From the expected influx of institutional investment to transformative regulatory changes and the milestone of Bitcoin’s fourth halving, the groundwork has been laid for significant growth and wider adoption.

Additionally, evolving perceptions of Bitcoin as a secure, decentralized asset and a growing recognition of it as an environmentally and socially responsible option underscore its potential to transcend its current role in the financial sector. The enthusiastic embrace of global leaders and innovative advances in technology will only add to the narrative of this progress and potential.