Recently, Capriole Investments released a wide-ranging report; a compelling case about the reasons 2024 will be a significant year for Bitcoin, possibly making available the highest returns in its current four-year cycle, Charles Edwards. The report researches a number of aspects of Bitcoin’s future. This includes, but is not limited to, its role as a hedge against inflation, the influence of g ETF approvals, the upcoming halving event, and the upcoming halving event.
BTC rose to $26,246, an increase of 1.8% in the last 24 hours.
Catalysts for Bitcoin
Edwards states, “Bitcoin gets a hard rep for its performance coming out of 2021 amidst growing inflation,” In the same vein, Edwards asserts, “Bitcoin was a great inflation hedge – it was when it needed to be.” It is clear that his vision of Bitcoin’s performance as an inflation hedge differs from popular belief.
It is quite notable how Bitcoin has outperformed all other asset classes having a 1000% rise from Q1 2020 to Q1 2021, Edwards states that increase was a direct response to the Federal Reserve’s multi-trillion-dollar QE packages announced in March 2020. “Today, markets move incredibly fast and look to the future. As soon as macroeconomic announcements are made, pricing begins,” Edwards says.
Comparing Bitcoin and traditional hedges, Edwards notes that Bitcoin’s performance during the liquidity boom was unparalleled. “There is no doubt that Bitcoin dominated the crisis as the best hedge against inflation,” he says, adding: “There is no second best. Bitcoin was the biggest inflation hedge we’ve ever seen.”
The second key catalyst for Bitcoin is the upcoming halving in April 2024. Edwards highlights the severity of this event and states: “The upcoming Bitcoin halving in April will drop Bitcoin’s supply growth rate to 0.8% p.a. and below that of Gold (1.6%) for the first time ever.” This means that “In April 2024, Bitcoin will for the first time become harder than Gold.”
Charles addresses the common argument that the halving is already included in the price by saying that, “If there is one thing we have learned from Bitcoin’s past it’s that the halving is never priced in.” He maintains that 80% cycle drawdowns restore all interest in Bitcoin. Additionally, he refers to parallels to previous cycles, pointing out that many on-chain metrics indicate that the actual cycle exactly mirrors those of 2019 and 2015.
Third, Edwards also addresses the regulatory landscape, highlighting the clarity brought by the CFTC’s classification of Bitcoin as a commodity in 2021. He also mentions the important announcement of Blackrock’s Bitcoin ETF application and the court order federal appeals case for the SEC to reconsider its Grayscale Spot ETF Rejection. It is his expectation that the SEC will approve the spot ETF in October 2023 or January 2024.
Discussing the potential impact of ETFs on Bitcoin, Edwards draws a parallel with gold, pointing to the significant bull run that followed the approval of the gold ETF in 2004. “When the Gold ETF approval hit, what followed was a massive +350% return, seven-year bull-run,” the analyst remarked, adding, “So, we have three incredible catalysts on the very near horizon,” he states, listing the upcoming halving, imminent ETF approvals, and Bitcoin’s status as the best inflation hedge.
To sum up, Edwards provides us with a bullish but cautious outlook. Whilst he recognizes the short-term bearish signs, he shows optimism about the long-term prospects. “In Bitcoin’s four-year cycles, there are typically 12-18 months where 90% of returns happen, followed by 2-3 years of sideways and down,” he observes, adding, “I am expecting that the single highest returning year of this cycle will be 2024 and I believe the data supports that thesis.”
By Leonardo Pérez
