Bitcoin’s comeback: For these five reasons, VanEck expects the Bitcoin price to double

• VanEck sees a 100 percent return opportunity with Bitcoin
• VanEck analysts see a four-year cycle linked to Bitcoin halving
• Increased blockchain trading volume invites optimism

Bitcoin is back – at least one could come to this conclusion by looking at the charts of the past few months. While the year 2022 was catastrophic for the original cyber currency, a phenomenal rally started right on time at the beginning of this year. In connection with hopes for the US market launch of a Bitcoin spot ETF, Bitcoin rose above the $35,000 mark on October 24th for the first time since May 2022.

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The interim conclusion: In 2023, Bitcoin is currently up 121 percent at a current level of 36,614.65 US dollars (as of November 9th), which even exceeds the performance of the US tech index NASDAQ 100, which has also done well (plus 39 .98 percent). Bitcoin also noticeably underperformed other cryptocurrencies, such as Ethereum (plus 57.41 percent), thanks to its strong run this year.

But after this month-long rally, is the air now out? Or are the recent price gains just the starting signal for a new Bitcoin bull market? VanEck, one of the world’s largest asset managers, leans towards the second view.

There are five reasons that the crypto analysts at VanEck have identified for a Bitcoin bull market that is about to start in their study “Five reasons why the bull market could start tomorrow”. Taken together, these aspects would ensure that the original cryptocurrency would double again – i.e. increase by 100 percent – in the coming months.

First reason: Bitcoin’s four-year cycle

The VanEck analysts identify a supposed four-year cycle for Bitcoin as the first reason for their crypto optimism. “The four-year cycle in cryptocurrencies refers to a pattern in which significant market movements occur approximately every four years. This pattern is closely related to the Bitcoin halving, which occurs approximately every four years,” quotes “BÖRSE ONLINE” from the VanEck study. According to this argument, 2023 marks the beginning of a new four-year cycle that will last until 2026. “Historically, this is an encouraging signal for the crypto market. Based on past trends, we can expect a bull market in the next two to three years,” according to the VanEck analysis.

Second reason: Bitcoin halving

The second reason is closely related to the first: The Bitcoin halving, which is scheduled to take place on April 17, 2024 and will halve the number of newly distributed Bitcoins, will trigger further buying interest. In other words, according to VanEck analyst Menno Martens, this measure will halve the inflation rate of Bitcoin, i.e. reduce it by 50 percent. Menno Martens writes: “Traditionally, bull markets begin long before the actual halving. This is based on the assumption that the lower reward for mining will lead to a shortage, potentially driving up the price.” The 840,000th block will probably have been reached by the expected halving date of April 17, 2024. After the halving, the block reward for BTC miners will be 3.125 Bitcoin per mined block until the halving in 2028, writes “WirtschaftsWoche”.

Third reason: High proportion of long-term Bitcoin investors

VanEck sees the ratio of short-term to long-term investors as the third reason for an upcoming Bitcoin bull market. “Historically, the bottom of a bear market was when the proportion of long-term holders peaked. When the market moves into a bull phase, the ratio shifts back in favor of short-term holders.” A graphic printed in the VanEck study shows that the proportion of short-term investors has decreased dramatically since Bitcoin’s record high in November 2021 and recently reached a historic low. However, the proportion of investors who have remained loyal to the original cryptocurrency for several years has continued to rise – according to VanEck, this ratio should be seen as a sign of an impending upward movement.

Fourth reason: Blockchain trading volume recovery

According to Martens, further cause for optimism is the fact that the trading volume of Bitcoin on the blockchain has recovered significantly. The Bitcoin network is being used increasingly again, which suggests increased interest in the crypto sector in general and in Bitcoin in particular, said Martens. In fact, Bitcoin trading volume has increased in recent weeks. Significantly more Bitcoins were traded in October than was the case in the summer months, data from “Bitcoinity” shows.

Fifth reason: Generally higher trading volume on the capital markets

The last reason given by VanEck does not only apply to the crypto market, but also targets the broader capital market. According to this, there has recently been greater interest among investors in stock market investments. Bitcoin should also benefit from generally good market sentiment, says Martens. “While the price increase is an important factor, the trading volume, which reflects the level of market participation, has also changed significantly. This developing dynamic could signal the transition from a bear to a bull market on the stock exchanges,” writes Martens in the VanEck study.

VanEck is in good company with crypto confidence

Whether VanEck’s optimistic Bitcoin forecasts will come true in the coming months depends on many factors. In addition to actual crypto-internal aspects – such as the course of the halving in 2024 or the broad acceptance of Bitcoin as a recognized asset, for example through Bitcoin spot ETFS – it will also depend on further developments on the interest rate markets and economic developments as to whether the risk appetite ( of potential) crypto investors will increase significantly again in the coming months.

Finally, it should be noted that the Netherlands-based asset manager VanEck is not alone in his confidence regarding the future development of the original token. Rather, there has been a renewed interest in Bitcoin in recent weeks – global searches for Bitcoin have increased rapidly. An increasing number of analysts are also recommending Bitcoin investments and the US investment bank Jefferies recently even called for Bitcoin to be included in the portfolio of highly capitalized US pension funds.

Editorial team finanzen.net

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