As Bitcoin returns to 45,000, trading agency Matrixport issued an article stating that the price of Bitcoin may reach US$50,000 in January, due to the adoption of Bitcoin spot ETFs, institutional buying, supply shortages and historical trends. At the same time, Matrixport also believes that the altcoins season is coming and Bitcoin funding fees are rising.
After a typical consolidation period from mid-December to the end of the month, Bitcoin appears poised to breakout amid strong buying early in the new year.
Anticipate a substantial #Bitcoin surge to $50,000 in January, driven by an imminent #BitcoinSpot #ETF approval, institutional buying, and factors such as supply shortage and historical trends, with potential for #altcoin season and a funding rate reaching +66%.
Read the full… pic.twitter.com/sueG5LqENp
— Matrixport (@realMatrixport) January 2, 2024
Table of contents
ToggleThe transformation of institutional investors
A year ago, most market participants were pessimistic about the market, resulting in low holdings. However, things unexpectedly turned around, with stocks and cryptocurrencies rising significantly. Institutional investors can no longer afford to miss out on a potential rebound and must buy now when trading opens in 2024. Matrixport is expecting a rally that will catch investors off guard.
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Bitcoin spot ETF may be approved soon
Approval of the Bitcoin spot ETF could be announced today or tomorrow, earlier than the January 8th, 9th or 10th that most traders expect. If this happens, we expect Bitcoin prices to rise significantly. It’s unlikely to be a “sell the new” event, as approval would make Bitcoin a legitimate asset class in institutional portfolios that can be used as collateral for purchases of other assets.
Risks of capital inflows and supply shortages
The risk may be on the upside, as there may be $5 billion to $10 billion in fiat currency funds that cannot find enough Bitcoin on exchanges to add exposure to a Bitcoin ETF.
This is because following the FTX explosion in 2022, many Bitcoin holders have moved their BTC off exchanges and become more familiar with cold storage options. The result of this is that 70% of Bitcoins in circulation have remained unchanged over the past twelve months.
Bitcoin Mining Company Supply Limits
Matrixport said that Bitcoin mining companies tend to limit supply during the halving cycle (expected in April 2024); this may be another reason for the supply shortage.
Matrixport said sometimes price developments in commodity markets are when market participants are forced to buy, but sellers refuse to sell at those price levels. The result has been a massive price increase, and Bitcoin’s price action this year may surprise everyone.
An election year and Bitcoin’s strong performance
Matrixport said Bitcoin tends to perform strongly during halving cycles, which coincide with the U.S. election cycle.
In 2020, 2016, and 2012, Bitcoin’s average return was +192%. This could push Bitcoin towards the $125,000 target set by Matrixport in July 2023, based on our One-Year High indicator. Likewise, U.S. stocks typically perform strongly in U.S. election years, with the only two declining years since 1960 being 2008 (-37%) and 2000 (-9.1%).
Extraordinary surge in Bitcoin funding rate
Matrixport said that surprisingly, Bitcoin’s funding rate remained high during the holidays, indicating that crypto traders are very bullish and looking forward to Bitcoin spot ETF approval. With Bitcoin’s market share falling to 50.3%, we are about to declare a season of high volatility in the crypto market.
Matrixport said that although it has not seen increased minting activity on Tether, representing fiat inflows into the cryptocurrency, the fact that the price is rising may be that there are no sellers in the market and the price is being pushed higher.
This morning, the funding rate hit a new high at +66%. This means that longs have to pay 66% of the annual funding fees of shorts to remain long.
This is how the futures market could squeeze the spot market and potentially push Bitcoin to our $50,000 target level for January 2024, which looks quite feasible. We could be trading over $50,000 before the end of the week.
