3 Events Set to Converge and Send Crypto Into the Stratosphere in 2024
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| By Juan Villaverde |
A key convergence of three bullish events is expected to create a perfect storm for an explosive new bull market between 2024 and 2025.
The first event is Bitcoin’s (BTC, “A”) fourth halving, which should happen around April 19, 2024. (Halving is the 50% cut in miners’ fees for validating transactions on the blockchain — which occur roughly every four years.)
The past three halvings have consistently triggered massive rallies in not just Bitcoin, but the entire crypto market.
The second event is the approval of a Bitcoin spot ETF. The growing anticipation is due to a key deadline which is set for Jan. 10.
The approval of this ETF could usher in a wave of institutional investors, further amplifying the impact of Bitcoin's halving.
The third event is a pivot in Federal Reserve policy. Chair Jerome Powell has been signaling that, after maintaining steady interest rates throughout most of 2023, the Fed is likely anticipating two rate cuts in 2024.
These expectations, coupled with warnings of a softening U.S. and global economy, indicate that the Fed might adopt a more accommodative stance next year.
My interpretation? I think Fed officials got rattled by the third quarter’s bond sell-off.
Recall the U.K. gilt market crisis in October 2022, which prompted a global pivot in central banking policy. Fast forward to October 2023, and it was the U.S. Treasury market showing distress signs.
Just look at this chart …
Almost exactly a year after the U.K. gilt crisis, the U.S. Treasury market began its own descent into turmoil. This led to a shift in the Fed's tone.
Suddenly, officials began warning of a possible recession in 2024 and acknowledging retreating inflation. This change in narrative had its intended effect.
U.S. Treasurys rallied after hitting a low on October 23. At last week’s press conference, Powell’s comments about a softening economy and rate cuts in 2024 added fuel to the fire.
The result: a robust rally in U.S. Treasurys.
This scenario underscores my long-held view that the Fed’s primary goal in life is to support the U.S. Treasury market. They achieve this by injecting liquidity and potentially cutting rates … which in turn boosts global liquidity.
It's well-known that liquidity is vital for the smooth operation of global financial markets. And no asset class responds to global liquidity quite like crypto.
As we head into the 2024, the stage is set for a dynamic bull market in crypto. We have the much-anticipated Bitcoin halving, the potential approval of the spot Bitcoin ETF, and assurances from the Federal Reserve of ample liquidity in 2024.
This rare convergence of three profoundly bullish events could well catalyze one of the most dramatic bull markets in crypto history, making 2024 a year to watch closely.
Best,
Juan Villaverde
