Actually Bitcoin did reach a new high this year and by the time you’re reading this report, with my luck, they’ll all have disappeared. I’m sorry. Bitcoin is up close to 160% this year and it’s now over $43,800 a coin for the first time since good old 2021 back when Bitcoin reached over 68,000.
But here’s the thing for Bitcoin to have the exact same purchasing power as it did during its peak in November 2021, it would have to be worth $76,145 today to be the equivalent of the Bitcoin back then, thanks to the disappearing value of the dollar, aka inflation. Now the real question is, How High Will Bitcoin price Go In 2024?
Bitcoin price 2024
Because just recently, Bitcoin also became the ninth most valuable asset in the world, like gold at number one, Apple, Microsoft, Saudi Aramco, Google Amazon, Silver, Nvidia, and Bitcoin at number 9.
Bitcoin is now more valuable than Berkshire Hathaway, Tesla, and Visa. But the truth is it’s not just happening to Bitcoin, it’s happening to a lot of other assets too. And in today’s report, I want to help explain exactly why it’s happening and potentially How High Will Bitcoin price Go In 2024?
Come for the finance and stay for that Bitcoin magic. Now, there’s three main reasons why Bitcoin is going up in price.
The first reason is because of interest rates. And this is affecting more than Bitcoin, it’s also having an effect on stocks and hurricanes, Dorados, and here’s exactly how it works. Remember, the stock market is always forward looking.
It’s always trying to predict the future. So the price of a stock today is not what it’s worth today, it’s what people think they’ll be worth sometime in the future. Now Bitcoin also works the exact same way, it’s trying to predict something about macroeconomics or big picture things happening to the economy.
And right now Bitcoin thinks the economy is headed for the worst and that the Fed will have to come in and save the day by dropping interest rates. Now the evidence of why Bitcoin thinks that is because of something called the Fed’s beige book.
So I can’t make this up because it’s straight out of Hunger Games. Which by the way, if you haven’t seen the prequel, it’s amazing go and watch it. The Fed’s beige book is where the 12 districts aka the 12 regional banks ask business leaders where they think the economy is headed.
This report is not quantitative, it’s more qualitative, which is a fancy way of saying it’s not numbers-based, it’s more opinion-based, but it’s still extremely valuable to the Fed.
Now in their latest Beige Book report, banks are saying the economy is slowing down significantly and that it’s gonna get worse over the next six to 12 months. Now how bad things will actually get and which assets will benefit is not something everyone agrees on, but some people say that right now the market is being overly optimistic.
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Crypto expectations in 2024
Bitcoin experts say:
There’s a lot of almost enthusiasm in the markets when you look at equity prices, when you look at a lot of other places that, hey, the Fed’s going to cut rates and that’s going to be great news. But my understanding from how I read this is if the Fed cuts rates in the first half of the year, it’s going to be because the economy’s in big trouble. So maybe it’s not something that’s worth cheering.
Now the expression you’ll sometimes hear people in the media use is the Fed fell behind the curve. The curve they’re talking about is this curve, which are interest rates, the cost for banks to borrow money from each other.
Eventually the Fed corrected and caught up to the curve, and that’s when you might remember we broke a couple banks. But now the critique is that the Fed is making the same mistake, but in reverse. They’re behind the curve on lowering interest rates, because if they hold the rates too high for too long, it could cause a hard landing or for the US to go into a deep recession. And that’s where Bitcoin’s prediction of what happens next comes in?
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Bitcoin prediction of what happens next comes in
Any story you can come up with right now always ends up in more Fed rate cuts. It’s quite amazing. If the economy really weakens, then the pressure will increase on the Fed to do something. What can they do? More rate cuts and eventually go into QE (The effects of quantitative).
So the market is predicting. If the economy slows down, which is exactly what it’s doing, the Fed’s hand will be forced and they’ll have to lower interest rates as many as five times next year. They’ll be forced to start QE and the buying up of assets, aka printing money, which is beneficial for Bitcoin and any asset that has a fixed limited supply.
Now the economist also says that even if the economy gets way stronger, they’ll still have to lower interest rates and that’s because if they don’t, it could cause a classic recession thanks to the business cycle, the rising cost of debt and higher unemployment, which iswhat Markus Schomer said:
Even if the economy were to strengthen right now and bond yields would rise, it would threaten the nascent recovery in the housing market. It would potentially start the classic recession style domino effect of companies not being able to service their debt at rising bond yields and rising interest rates and the default cycle starting, layoffs starting, and that’s actually the classic way of getting into a recession. End.
When you combine all those reasons with the fact that next year 2024 is also election year, and you have even more pressure for the Fed to lower interest rates to make sure the economy is doing well. Even though the Fed’s job is to stay out of politics and stay completely neutral, people say that humans will always human and they’ll always have a preference.
All those reasons add up to the fact that the Fed will probably lower interest rates sooner than people think. And here is probably exactly when. It shows the Fed’s next meeting, which will happen Wednesday, December 13th that the market is predicting a 97.7% chance that the Fed will keep rates the exact same.
But it’s also predicting over a 50% chance that they’ll lower the rates for the first time by a quarter percent sometime in March 2024. As we get closer to March 2024, keep an eye on that chart because most likely the probability of them lowering rates will go up even more.
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Why Bitcoin’s going up in price in 2024
According the David Rubenstein show by Bloomberg I think there’s a risk of a hard landing if the Fed doesn’t start cutting rates pretty soon. So I think the market expects sometime middle of next year. I think it’s more likely probably as early as Q1.
Now reason number two why Bitcoin’s going up in price is because of something called the haven or havening. In April of 2024, when the machines and AI take over, when the cyber trucks will rule the land and chat GPT replaces us, that’s when Bitcoin will become more rare than gold.
Which sounds crazy to say because how do you even compare the rarities? Like what’s more rare, a pot of greed? Which allows me to draw two cards from my deck, Kyber. Or this beautiful Charizard Yu-Gi-Oh card which shouldn’t exist but does as a taxable write-off.
believe it or not there is an actual Mathematical way to compare the rarities and here’s how you do it by using a formula called the stock to flow We can take the amount of something in existence aka the stock and divide it by how much we can make aka the flow and the result is how many years it would take to Recreate the current supply and existence.
So for example, if I have 10 Charizard cards, but I can only make one per year we could take the stock of 10 divided by the flow of one to get 10 years. That’s how long it would take to recreate the current supply. But now let’s compare the stock to flow of Bitcoin to gold using some real math.
Bitcoin’s current stock is 19 and a half million coins. That’s how many there are roughly in circulation today. Now the flow of Bitcoin is a little more complicated to figure out, but the number is 328,600. Source, trust me bro.
Now the way I got that number, is by taking the block rate of production, which is 144, since each block rewards us with 6.25 Bitcoin, multiplying the two out gives us 900 Bitcoins per day. Multiply it by 365 days in a year, that gives us 328,500 Bitcoins.
That’s how many get mined or created every single year. Now we can take the stock of 19 and a half million in circulation, divide it by the flow of 328,500 and the result is 59.3. That’s how many years it would take for us to recreate Bitcoin’s current supply at today’s rates of production.
But now we can compare that number to gold and see which one is more rare. According to the USGS, the United States Geological Survey.gov, there’s about 244,000 metric tons of gold, and we mine between two and a half to 3,000 tons a year, which is our flow.
So if we take 244,000 tons, which is our stock, divided by, let’s say, the average flow between the two numbers, 2750, we get 88.7 years. That’s how long it would take at today’s rate of production of gold to recreate our current supply.
Because that number is higher than Bitcoins, and it would take gold longer, that means gold today is more rare than Bitcoin. But after April, 2024, all of that will change, because now the formula becomes the same stock, 19 and a half million, divided by not 328,500, but half of that. That’s gonna be the new flow of 164,250. And the new answer is gonna be 118.7 years.
That’s how long at that point it would take to recreate Bitcoin’s supply, making it significantly more rare than gold. And that’s a big deal because remember, gold supply isn’t always fixed. Some years we discover more, sometimes less. But gold’s supply or stock goes up over time. whereas Bitcoin’s is fixed at 21 million.
So what we’ve seen historically is that the 12 to 16 months after a happening is the best performance of Bitcoin. So that’s what everybody’s thinking about. And the third reason Bitcoin’s price is going up is because the Spot Bitcoin ETF, which will be announced between January 5th and January 10th.
If it gets approved, it will be one of, if not the most historical things that will ever happen to Bitcoin, at which point I don’t know how fast the price will go up.
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How High Will Bitcoin price Go In 2024
but theoretically, it should go up over the long term. So now I guess the ultimate question is, how high will Bitcoin’s price go this time around? And the longer I’m invested in Bitcoin, the more I feel like a crazy person who lives in Groundhog Day forever.
People are having the exact same debates as they did way back in 2009 about how Bitcoin might be based on the greater fool theory which says that you’re a fool to buy Bitcoin to begin with and the only way you can make a profit is by selling your Bitcoin to an even greater fool.
I also see the exact same arguments that Bitcoin has no intrinsic value especially when compared to gold which can be used in manufacturing and as jewelry whereas Bitcoin isn’t even real.
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Jamie Dimon said about How High Will Bitcoin price Go In 2024
JPMorgan chase CEO Jamie Dimon said: I’ve always been deeply opposed to crypto, bitcoin, etc. You pointed out the only true use case for it is criminals, drug traffickers, anti-money laundering, tax avoidance. If I was the government, I’d close it down. End.
I think there’s plenty of irony in some of the statements when you consider all the facts here, but I also have to respect Jamie Dimon’s point of view, because he didn’t become the CEO of arguably the world’s most powerful bank by accident. But I also learned that it’s good to take the competition’s opinion with a little bit of doubt.
I don’t listen so closely to the hotels talk about Airbnb, or the cab companies talk about Uber, or maybe the banks criticizing Bitcoin.
But as we go through this, you’ll see the same feelings of fear of missing out and the cycle will keep repeating itself again and again. And I remember going through all of this myself back in 2014 when I bought into it and then it crashed and I said, I will never touch this Ponzi scheme again. And then I heard of Bitcoin once again, maybe a year and a half later when it was worth a thousand dollars. And the first thing that I said was, hang on, how is this supposed Ponzi scheme still worth anything at all?
If this thing’s a scam, it should be worth a zero. Not $10 or $100, certainly not $1,000, but $0. Sure, there have been bubbles in the past, but there would have to be a global conspiracy for something like Bitcoin to be this valuable and for this long. I came to that realization when Bitcoin reached $1,000. Other people did when it reached $100. I expect that some people will have that awakening moment.
when it hits $100,000. But what’s interesting is that now that it’s almost 15 years after its creation, and it’s worth tens of thousands of dollars, it’s becoming harder to ignore and even harder to come up with something original to criticize it with. So I stopped fighting it and I asked myself, how high could this thing go?
And the truth is, I have no idea. No one knows. I have my theories but instead I thought what was more important is to just make it a small part of my investment strategy because if the critics are right, then I’ll lose a little bit of money. And if they’re wrong, I could end up making quite a lot of money. And that seems like a pretty reasonable bet to make. So I took that bet and I’m learning more and more. And so far, it’s been working out pretty well to me.
A Bitcoin analyst Dylan LeClair
An interesting statistic is, if you dollar cost average every single day with $10, from January 1st until now, you’re up 100%. So with all the boom, the bust, everything in between, a Bitcoin analyst, Dylan LeClair, pointed out, you’re up 100%. So just dollar cost averaging alone would give you a great return.
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