Matrixport on BIT - Pulse Check: Why Bitcoin Surging above $40,000 is Inevitable

- by Markus Thielen

Despite the negative Binance news, initially perceived as a risk-off event, Bitcoin has only experienced a temporary correction, bouncing back to its nearest support at $36,000. A robust counter-trend reaction has since emerged, and we anticipate a high likelihood of Bitcoin surpassing $38,000 by the end of this month with an 80% probability, followed by a rally above $40,000 in December with a 90% probability. Our outlook remains bullish.

Since September 2023, Tether’s USDT market capitalisation has increased by $5bn, signaling a growing trend among institutional investors to shift fiat (dollars) into stablecoins, potentially converting them into other cryptocurrencies, such as Bitcoin. Notably, there has been a noticeable increase in fees across various blockchains, with Bitcoin exhibiting the most significant rise in monthly fees this month. Bitcoin prices surged by +28% in October 2023 as the probability of a Bitcoin spot ETF being listed in the U.S. increased. Though November appears to be a month of consolidation with average returns of +6%, it is clocking in at +8.5%. This indicates that seasonality appears to be influencing the market again.

Bitcoin's dominance reached its peak at 53.4% on October 26. With BlackRock filing for an Ethereum ETF, traders have increasingly allocated risk capital towards Ethereum as a higher beta-trade. Notably, fees within the Ethereum ecosystem in November have reached the highest level since July 2023. Ethereum's short-term re-enter level is $2,030. The shorter-term model went long on September 27 at $1,600. Our longer-term model suggested a long position on October 25 at $1,787. 
The macro-environment continues to support crypto. We confidently anticipate bond yields to fall to 2.60% in 2024 (or 2025) as the US 10-year Treasury yield appeared to have peaked at 4.95% for this cycle and is (nearly) testing last year’s high at 4.20/4.23%. This re-pricing of bond yields is poised to trigger a new boom for the stock market, particularly benefiting second-tier technology stocks, which typically correlate with second-tier (altcoins) cryptocurrencies

Written by Markus Thielen, Head of Research & Strategy at Matrixport. Author of Crypto Titans.

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Industry views and information shared do not represent Matrixport's position and do not constitute any investment advice.