Main Points:
- Bitcoin halving and its influence on price growth.
- Impact of Bitcoin ETFs and inflows from institutional investors.
- U.S. presidential elections and potential regulatory impacts on Bitcoin.
- Risk factors such as U.S. government BTC sales and Mt. Gox repayments.
- Long-term outlook for Bitcoin as a reserve asset.
- Potential changes in altcoin markets due to Bitcoin ETF approval.
- Recession scenarios and Bitcoin’s role in economic downturns.
Analyst Perspectives at WebX 2024
At the WebX 2024 global conference organized by CoinPost, three top analysts discussed the long-term outlook for Bitcoin (BTC) following the halving and ETF approval. The panel featured virtual NISHI from SBIVC Trade, Tomoya Hasegawa from Bitbank, and Masamitsu Matsushima from Monex Securities, each offering unique insights into BTC’s future trajectory.
Bitcoin’s Supply Limit and Halving Cycles
Virtual NISHI opened the discussion by addressing the constrained supply of Bitcoin. The halving event, which occurs every four years, reduces the reward for mining new blocks by half, thus decreasing the rate at which new Bitcoin is introduced into the market. This has historically driven price increases. NISHI also pointed out that an estimated 2% of Bitcoin’s total supply is lost due to forgotten private keys or owners passing away.
NISHI referred to previous price surges following halvings, which were further amplified by favorable U.S. financial policies. In 2024, Bitcoin received an additional boost when the U.S. Securities and Exchange Commission (SEC) approved the first spot Bitcoin ETF in January. Since then, Bitcoin’s price has experienced significant upward movement, spurred by the ETF launch and increased U.S. dollar liquidity.
Impact of Bitcoin ETFs: Inflows and Market Stability
Hasegawa focused on the inflows into Bitcoin ETFs, particularly the record-breaking figures from institutional investors. Since the SEC’s approval, funds like BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund have attracted a massive $2.6 trillion in inflows. Even amid high U.S. interest rates, the institutional interest in Bitcoin ETFs continues to grow.
He emphasized that the Bitcoin ETF approval signifies a shift in Bitcoin’s market dynamics, with the involvement of traditional financial institutions, pension funds, and hedge funds bringing more stability. Hasegawa predicted that if the U.S. Federal Reserve (Fed) lowers interest rates, capital flows into alternative assets like Bitcoin would accelerate.
On the flip side, he warned about potential selling pressure from the U.S. government’s confiscated Bitcoin, as well as repayments to Mt. Gox creditors, which could affect market sentiment. However, the overall net inflow from ETFs still outweighs these risks, making Hasegawa optimistic about Bitcoin’s future.
The U.S. Presidential Election and Crypto Policies
Matsushima shifted the conversation to the political landscape, specifically the upcoming U.S. presidential election. He noted that former President Donald Trump’s pro-cryptocurrency stance, as highlighted in the Republican Party’s policy platform, could favor the crypto market. Trump has expressed interest in positioning the U.S. as the world’s largest Bitcoin hub.
In contrast, the Democratic Party, under Vice President Kamala Harris, has taken a more cautious approach. The party is concerned about environmental issues related to Bitcoin mining and has considered implementing taxes on it. The SEC, under the leadership of Chairman Gary Gensler, has been stricter with its crypto regulations, including enforcement actions against some major players.
Matsushima speculated that if Harris wins the presidency, Gensler may be appointed Treasury Secretary, which would remove him from direct oversight of crypto regulation. This could introduce short-term uncertainty for the market but may ultimately reduce the regulatory pressure on cryptocurrencies.
Bitcoin’s Role as a Reserve Asset
Matsushima also explored the potential for Bitcoin to be recognized as a national reserve asset. He compared Bitcoin to gold, noting that countries like China and India have been increasing their gold reserves to combat inflation and reduce reliance on the U.S. dollar. Bitcoin’s growing reputation as “digital gold” could eventually lead to its adoption as a reserve asset by countries, which would drive its price even higher.
The increasing acceptance of Bitcoin by financial institutions and its potential use by nations to diversify their reserves are indicators that the asset is gaining legitimacy in the eyes of traditional finance.
The Changing Relationship Between Bitcoin and Altcoins
Virtual NISHI raised the question of how the rise of Bitcoin ETFs might impact the altcoin market. Matsushima responded by highlighting the shifting dynamics between Bitcoin and altcoins. Historically, there has been a clear divide between Bitcoin and altcoins, but the introduction of Bitcoin ETFs has changed the equation. The participation of institutional investors means that the market will no longer behave in a simple “Bitcoin vs. altcoin” manner.
Matsushima predicted that the phenomenon of “alt seasons,” where altcoins dramatically outperform Bitcoin, may become less frequent as Bitcoin solidifies its position as a preferred institutional asset. This could lead to a more mature market structure where altcoins are valued based on their utility rather than speculation.
Recession and Bitcoin’s Resilience
Hasegawa asked NISHI how Bitcoin would perform in a recession. NISHI pointed out that during past financial crises, such as the COVID-19 pandemic and the 2008 financial crash, governments responded with monetary easing policies. These measures typically increased liquidity in the market, which benefited risk assets like Bitcoin. He suggested that unless there is a severe economic downturn, Bitcoin is likely to perform well in the long term during periods of increased liquidity.
Risks of Bitcoin Price Declines
Despite the optimistic outlook from all three analysts, they acknowledged the risks that could lead to a Bitcoin price decline. Matsushima expressed concerns about the U.S. government’s potential regulatory actions, particularly against Tether (USDT), the largest stablecoin by market share. If Tether were to face regulatory crackdowns, it could cause instability in the DeFi (decentralized finance) sector, potentially leading to a broader market decline.
Hasegawa also noted that while previous halving cycles have resulted in significant price increases, this may be the last time we see such a dramatic impact. With institutional investors entering the space and the Bitcoin ETF market maturing, the price swings may become less extreme.
A Bullish Yet Cautious Outlook for 2024
In conclusion, all three analysts shared a bullish long-term view of Bitcoin, particularly in light of the recent ETF approval and halving event. However, they also highlighted key risks, such as regulatory actions and potential selling pressure from government-held Bitcoin. The introduction of institutional investors has added stability to the market, and Bitcoin’s role as a potential reserve asset could push its price even higher. While the relationship between Bitcoin and altcoins may evolve, the overall sentiment is that 2024 will be an exciting year for cryptocurrency investors.
