According to its latest report, Matrixport strongly believes that Bitcoin and cryptocurrency prices are destined to skyrocket in 2024, regardless of the SEC’s decision on ETF approval.
As 2023 draws to a close, anticipation surrounding the approval of spot Bitcoin exchange-traded funds (ETFs) by the US Securities and Exchange Commission (SEC) has generated considerable enthusiasm among analysts and traders.
While many are pinning their hopes on these index funds to drive a significant rise in Bitcoin prices and the broader crypto market, Matrixport, a digital asset financial services platform, offers a different perspective.
Fed Rate Cuts as a Catalyst?
An influential factor identified by Matrixport is the recent declaration of victory by Jerome Powell, chairman of the United States Federal Reserve (Fed), in the institution’s fight against inflation.
Powell’s mention of possible rate cuts caught the attention of the digital asset platform, which noted in its report that Bitcoin prices rose nearly 300% in 2019 as the Federal Reserve ended its hiking cycle and maintained the unchanged rates for an extended period.
Matrixport draws parallels with the current scenario, where the Federal Reserve projects three cuts, equivalent to 75 basis points, in 2024. In addition, Matrixport’s analysis incorporates its own inflation model presented a year ago, which projected a sharp drop in inflation from 8% to 3%. -4% by the end of 2023.
This model instilled strong confidence in the platform, suggesting that risk assets, including stocks and cryptocurrencies, would witness a substantial rally in 2023.
Possible CPI Decrease Strengthens BTC’s Role as a Hedge Against Inflation
Matrixport’s proprietary inflation model also indicates the possibility of the US Consumer Price Index (CPI) falling below 2% by the end of 2024. This prediction has significant implications for the price of Bitcoin and its role as a possible hedge against inflation.
The CPI serves as a key measure of inflation and reflects changes in the average prices of a basket of goods and services over time. A drop below 2% suggests a slowdown in the rate of price increases, which could indicate a more moderate inflationary environment.
In such a scenario, investors could look for alternative assets like BTC that can preserve their purchasing power and protect them from value erosion caused by inflation.
Is SEC’s Bitcoin ETF Decision Irrelevant?
Matrixport emphasizes that even if the SEC maintains its disapproval of Bitcoin spot ETFs in January 2024, higher cryptocurrency prices are still expected throughout the year.
Additionally, the report highlights the substantial growth in US money market fund assets, which have doubled since the start of the COVID-19 pandemic, reaching a staggering $6.1 trillion. This growth implies an additional $320 billion in interest rate payments per year, creating a potential influx of $370 billion annually or approximately $1 billion daily into risk assets such as stocks and cryptocurrencies.
Matrixport’s bullish outlook for 2024 also takes into account major developments on the horizon. The year marks a Bitcoin halving cycle, historically associated with substantial price increases averaging 192%.
Moreover, 2024 is an election year and the possibility of former President Donald Trump being re-elected is considered high. Matrixport suggests that his policies could potentially boost the US economy, thus driving up stock and cryptocurrency prices.
The largest cryptocurrency on the market has currently been trading at $42,600, up 1.8% in the last 24 hours.
By Leonardo Perez
