Bitcoin Skyrockets to $44,000, Fulfilling Christmas Prediction

- by Markus Thielen

Bitcoin is surpassing our projected path for 2023 for the first time since May. On February 1, 2023, we set our year-end price target at $45,000 when Bitcoin had just crossed $22,000. Our year-ahead roadmap was based on inflation data points and central bank meetings, as we expected those to be the most critical drivers for this year. The benign inflation reading has brought back animal spirits; without this change in sentiment, the crypto market would still be in limbo.

Lower inflation numbers drove the January 2023 rally, and despite BlackRock filing for a Bitcoin Spot ETF in mid-June, Bitcoin prices dropped back to $25,000 during the September period. The assumption that US inflation would remain sticky (4-5%) was widespread in economic circles as the Fed members continued their hawkish forecasts. However, we saw confirmation in our inflation model that CPI would be materially lower by year-end, and we held firm to our price target.

Then, on October 19, with Bitcoin prices still below $29,000, Fed Chair Powell gave a dovish speech, signalling that the rise in bond yields has done the job of sending tightening signals through the economy. We became increasingly bullish as other forces and factors unfolded in conjunction with a better macro environment — without macro, there would not have been a “micro” rally.

Coincidentally, during the same week, Powell gave his dovish speech when crypto news site Cointelegraph falsely claimed that BlackRock's Bitcoin Spot ETF had been approved. Nothing happens in isolation, and the market would not have taken the bait without the favourable macro environment.

Many press releases around a potential SEC approval for a Bitcoin spot ETF have followed, and Bitcoin subsequently rallied. BlackRock listed a Bitcoin Trust on DTCC, and a judge ordered the SEC to re-review the Grayscale Bitcoin ETF filing. The SEC also dropped its lawsuit against Ripple Labs executives, and SEC Gensler said the FTX exchange could be rebooted. Initially, the crypto market was fast (in January) and then was slow to notice the favourable macro environment – only to jump into FOMO mode within days. Those opportunities don’t come frequently, but when they come, it's worthwhile betting on the farm.

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.