Source: PaxForex Premium Analytics Portal, Fundamental Insight
Following a disappointing 2022, Bitcoin has been staging an impressive comeback in 2023, with its price surging by 115% as of November 10th. Nevertheless, this leading cryptocurrency still lags behind its all-time high by 47%.
Given the recent strong momentum in Bitcoin's performance, investors are now likely setting their sights on a new milestone – the possibility of Bitcoin reaching $100,000, representing a potential return of approximately 170% from its current value. There are compelling reasons to believe this is a realistic prospect.
The current period is unique in that it presents three potential catalysts in the near term that could drive Bitcoin to new heights. The first catalyst that's on everyone's radar is the pending approval of spot exchange-traded funds (ETFs). Several major asset management firms, including BlackRock, Fidelity, and WisdomTree, among others, have submitted applications to the Securities and Exchange Commission (SEC), with a decision expected by January 2024.
If these ETFs are approved, it would not only legitimize Bitcoin as a financial asset endorsed by leading traditional financial institutions but also offer a regulated and accessible way for many investors to gain exposure to Bitcoin's price without directly owning the digital asset. Approval by the SEC could potentially trigger a significant surge in Bitcoin's price.
Another potential catalyst is a more accommodating stance from central banks. Over the past year and a half, the Federal Reserve has aggressively raised interest rates to combat inflation, and this policy may continue. However, if Federal Reserve Chair Jay Powell and his team believe they are making substantial progress in curbing inflation, they might not only pause rate hikes but also consider lowering rates next year.
Historically, looser monetary policy has favored risky assets like stocks and Bitcoin. Lower interest rates incentivize investors to take on more risk to achieve their desired returns, which could attract additional capital into Bitcoin.
While the first two catalysts remain uncertain, the next one is set in stone. Bitcoin experiences a halving event approximately every four years, where its inflation rate is halved. The next halving is anticipated to take place in April 2024, resulting in a significantly lower annual inflation rate for Bitcoin compared to gold. This is a crucial development because the sustained increase in demand over time, combined with a reduced supply, is likely to drive the price of Bitcoin higher.
The historical performance of Bitcoin reinforces this narrative. In the lead-up to a halving and in the months following the event, Bitcoin's price tends to enter a robust bull market. This suggests that the current period is opportune for prospective buyers.
Furthermore, an impressive aspect of Bitcoin is its ability to surpass its previous all-time highs, achieving new peaks consistently. While past performance is not a guarantee of future results, historical data indicates a strong possibility that Bitcoin could reach the $100,000 milestone in the coming years.
It's tempting to adopt a bullish outlook on Bitcoin, but before incorporating it into their portfolios, investors should conduct a thorough assessment of their risk tolerance. Beginning with a small allocation, perhaps around 1%, is a prudent starting point.
Over time, the strategy should involve continuous learning about Bitcoin and its unique characteristics, along with monitoring the catalysts mentioned earlier. As one becomes more familiar with the cryptocurrency and its ecosystem, it may be wise to consider increasing the capital allocated to Bitcoin. It's essential to maintain a long-term perspective throughout this journey.
As long as the price is above 31000.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 36867.00
- Take Profit 1: 37500.00
- Take Profit 2: 39000.00
Alternative scenario:
If the 31000.00 level is broken-down, follow the recommendations below: :
- Time frame: D1
- Recommendation: short position
- Entry point: 31000.00
- Take Profit 1: 29600.00
- Take Profit 2: 2800.00
