MARKETBITCOIN

Matrixport: Bitcoin Price Expected to Reach $50,000 This Week, These Factors Will Bring about a Frenzied Trend

share
Matrixport: Bitcoin Price Expected to Reach $50,000 This Week, These Factors Will Bring about a Frenzied Trend

Trading institution Matrixport, as Bitcoin returns to $45,000, published a post stating that Bitcoin price could reach $50,000 in January, citing reasons such as the approval of a Bitcoin spot ETF, institutional buying, supply shortages, and historical trends. Additionally, Matrixport believes that the altcoin season is approaching, and Bitcoin funding costs are rising.

Following the typical consolidation period from mid-December to the end of the month, Bitcoin seems poised to break out in the strong buying market at the beginning of the new year.

Transformation of Institutional Investors

A year ago, most market participants were pessimistic, leading to low holdings. However, the situation unexpectedly improved, with both the stock market and cryptocurrencies significantly rising. Institutional investors cannot afford to miss the potential rebound opportunity, hence the need to buy immediately when the trading market opens in 2024. Matrixport anticipates a rebound that will catch investors off guard.

Possible Approval of Bitcoin Spot ETF Imminent

The approval of a Bitcoin spot ETF may be announced today or tomorrow, earlier than the expected dates of January 8th, 9th, or 10th by most traders. If this occurs, a significant increase in the price of Bitcoin is expected. It is unlikely to be a "sell the news" event, as approval would legitimize Bitcoin as a legitimate asset class for institutional portfolios, serving as collateral for purchasing other assets.

Risks of Fund Inflows and Supply Shortages

Risks could be on the rise as there may be $5 to $10 billion in fiat currency funds that cannot find enough Bitcoin on exchanges to increase exposure to a Bitcoin ETF.

This is because, following the explosive event at FTX in 2022, many Bitcoin holders have moved their BTC off exchanges, increasing familiarity with cold storage options. As a result, 70% of circulating Bitcoin has remained unchanged in the past twelve months.

Supply Restrictions by Bitcoin Mining Companies

Matrixport indicates that Bitcoin mining companies tend to restrict supply around the halving cycle expected in April 2024, which could be another reason for supply shortages.

Matrixport suggests that sometimes in commodity markets, price developments occur when market participants are forced to buy, but sellers refuse to sell at those price levels. This results in a significant price increase, and the Bitcoin price trend this year may surprise everyone.

Election Years and Strong Bitcoin Performance

Matrixport states that Bitcoin often performs strongly during the halving cycle, aligning with the U.S. election cycle.

In 2020, 2016, and 2012, Bitcoin's average return was +192%. This could potentially push Bitcoin to the $125,000 target set by Matrixport in July 2023, based on their "annual high" indicator. Similarly, the U.S. stock market typically performs well during election years, with the only two declining years since 1960 being -37% in 2008 and -9.1% in 2000.

Abnormally High Bitcoin Funding Rate, Expected to Reach 50,000 This Weekend

Matrixport notes that surprisingly, Bitcoin's funding rate has remained high during the holidays, indicating strong bullish sentiment among crypto traders who are anticipating the approval of a Bitcoin spot ETF. With Bitcoin's market dominance dropping to 50.3%, we are about to enter a season of high volatility in the crypto market.

Although there is no visible increase in Tether minting activity, representing fiat inflows into cryptocurrencies, the fact that prices are rising suggests a lack of sellers in the market and prices are being pushed higher.

This morning, the funding rate reached a new high, hitting +66%. This means that bulls need to pay bears a funding cost of 66% annually to maintain their long positions.

This is how the futures market squeezes the spot market, potentially pushing Bitcoin to the $50,000 target level set for January 2024, which seems quite feasible. We may see trading above $50,000 before this weekend.