The audacity to say that Bitcoin (BTC) hitting its all-time high before the halving is quite literally impossible might upset some of you. Yet, here I am, dissecting the stark reality that envelops the world’s largest cryptocurrency. I can understand the need to look at the bright side, what with Bitcoin’s dramatic surge from $25,000 to $52,000 in just four months. And what’s more, BTC’s market cap has also hit $1 trillion, which saw the currency elbowing its way into the league of the world’s top 10 tradable assets, even surpassing the venerable Berkshire Hathaway with its $875 billion market cap. But let’s not get carried away, guys. All-time high? Not happening. And I’ll tell you why.
Bitcoin’s Uphill Battle
Let me be straight with you. If you genuinely believe that Bitcoin is gonna climb an additional 34.5% to hit the $70,000 mark before the end of April, then you’re delusion. First of all, a surge like that would necessitate a $350 billion increase in its market capitalization, overtaking silver and the UK’s sterling in terms of market value. But the most important thing to consider is if the current trends support such a staggering market cap fpr Bitcoin in the near future. We’re talking $1.4 trillion.
Circa November 2021, Bitcoin flirted with its all-time high of $69,000 plus, buoyed by the then-rampant inflation and the tantalizingly low interest rates in the United States. The financial climate was definitely different, because investors were hungrily eyeing risk-on assets to combat paltry yields. Fast forward to today, and we’re staring at a 3.1% CPI inflation rate for January 2024, a scenario that, while above Federal Reserve targets, hardly screams the kind of economic turmoil that previously fueled Bitcoin’s ascent.
Moreover, expectations of a 10.9% increase in profits for S&P 500 corporations have refocused attention on the US stock market. When compared to the mad drive for yield that occurred in late 2021, it makes alternative assets like Bitcoin seem less appealing.
A Dose of Realism for Bitcoin
Okay so yes, the fanfare surrounding spot Bitcoin ETFs and the $4 billion net inflows they attracted definitely indicate growth, but not an imminent explosion in value. At least not in the way you might think. With the crypto giant still lagging 25% behind its all-time high, the promise of institutional inflow has yet to translate into the bullish surge I had envisioned.
An anthem for those fleeing the dilution of value in fiat currencies, Bitcoin’s story has always been one of resistance to inflation. Yet, as the halving looms, promising to slash mining rewards and potentially dampen the network’s hash rate, the prospect of a pre-halving price rally is out of reach. We’re expecting a significant portion of the hash rate to go offline post-halving, leaving only the most efficient rigs in operation.
The story of Bitcoin’s comeback to its all-time high is captivating, with its promise of overcoming economic gravity and coming out on top. I remain rooted in reality, nevertheless, due to the gloomy realities of market dynamics, regulatory environments, and fluctuating investor mood.
