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Matrixport: Six predictions for the crypto market in the first half of 2024

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The U.S. SEC may approve the Bitcoin spot ETF in January next year, Circle may be listed in April, FTX 2.0 will start operating in May or June, the Bitcoin halving cycle, and the Ethereum EIP-4844 upgrade plan are in The first quarter is underway and the

Original author: Markus Thielen, Matrixport analyst

Translated by: Wu Shuo Blockchain

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· In the first half of 2024, the cryptocurrency industry will experience five micro events and one macro event, which may have a positive impact on the industry and potentially drive up the price of Bitcoin.
· By January 2024, we expect the US Securities and Exchange Commission to approve a Bitcoin ETF, with trading expected to begin in February or March.
· Stablecoin issuer Circle may go public on the stock market in April.
Although the news of FTX winning the bid may be announced in December 2023, we expect the exchange to start operating in May or June 2024. FTX is expected to regain its position as one of the top 3 exchanges within 12 months.
· The above three events and the expected Bitcoin halving cycle are expected to provide healthy momentum for the next year.
· Despite the challenges of considering it as an important upstream catalyst, Ethereum's EIP-4844 upgrade plan will take place in the first quarter of 2024.
· This also coincides with the possibility of the Federal Reserve cutting interest rates in mid-2024, as market pricing indicates that the Fed will make its first rate cut in June 2024.

If inflation falls again, next week's CPI data in the United States may trigger another round of Bitcoin's rise. We expect Bitcoin to attempt to break through the recent trading range of $34,000 to $35,000. Breaking through $36,000 may push Bitcoin towards the next technical resistance level of $40,000, and may reach $45,000 by the end of 2023. With the steady increase of buyers during the US trading hours and the continuous attempts to break through Bitcoin, we can see the price rebound at the end of this month (and the end of the year). The Santa Claus rally may start at any time.

Chart 1: Bitcoin is attempting to break through higher price levels - targeting $40,000, and possibly reaching $45,000

The Potential Impact of the Expected US-listed Bitcoin ETF in 2024

In the first half of 2024, the cryptocurrency industry will experience five micro events and one macro event, which may have a positive impact on the industry and potentially drive up the price of Bitcoin. In 2023, cryptocurrency assets performed strongly, outperforming most other assets. Our fundamental value proposition lies in the Bitcoin ETF listed in the United States, which has the potential to attract registered investment advisors (RIAs) and manage $5 trillion in assets through ETFs, with Bitcoin as the cornerstone of a multi-asset investment portfolio. Just a 1% allocation could result in $50 billion of Bitcoin inflows.

Chart 2: Performance of selected assets from the beginning of the year to present

By January 2024, we expect the US Securities and Exchange Commission to approve a Bitcoin ETF, with trading expected to begin in February or March. Stablecoin issuer Circle may go public on the stock market in April. While news of FTX winning the bid may be announced in December 2023, we expect the exchange to launch in May or June 2024. These three events, along with the Bitcoin halving cycle, are expected to provide healthy momentum for the next year. Although considering them as important upward catalysts is challenging, Ethereum's IEP-4844 upgrade plan will take place in the first quarter of 2024. Meanwhile, the US Federal Reserve may cut interest rates in mid-2024, as market pricing shows that the Fed will cut rates for the first time in June 2024. This will occur when macro liquidity shifts from rate-driven headwinds to double liquidity provided by rate cuts.

Our year-end price target has shifted from ambition to achievability

One year ago, we released a report titled "Bitcoin may rebound to $63,160 in March 2024". In the report, we believed that the ideal opportunity to buy Bitcoin historically appeared in the 14-16 months before the next halving, which was in late October 2022 when the trading price of Bitcoin was around $20,000. However, it was our report released on December 2, 2022, titled "Bitcoin may reach $29,000 in 2023 driven by macroeconomics", that predicted a 70% increase in Bitcoin based on our expectation that the US inflation rate would decrease and provide a lot of liquidity to the crypto market.

Since then, inflation has indeed dropped significantly, although the fundamentals of cryptocurrencies such as Ethereum revenue data have been weak. However, as we enter 2024, the upward momentum of the cryptocurrency market may accelerate again. A month ago, the market entered another turning point, which may provide enough impetus for the fifth bull market to continue. When we released the report, our year-end target for 2023 set on February 3, 2023 was $45,000, which seemed ambitious as the trading price of Bitcoin was $22,500 at the time. However, with the market approaching the level of $40,000, this price target may be achievable.

Release the potential of institutional investors

Chart 3: The discount of grayscale GBTC relative to asset net value has narrowed from -45% to -14%, outperforming Bitcoin

Grayscale's Bitcoin Trust (GBTC) stock seems to be held by 61 institutional companies - anyone with reportable assets of less than $100 million, other than high net worth individuals, family offices, and other investors. SPDR Gold (GLD) ETF has 1,090 institutional investors, similar to BlackRock's iShares Gold ETF. The Bitwise Bitcoin ETF alone can attract more than 1,000 institutional investors. Although about 45 million Americans already hold cryptocurrencies, 160 million Americans own stock investments. The potential impact of investors on the cryptocurrency market is still significant but often underestimated. This influx can significantly increase the liquidity of the cryptocurrency market and greatly improve the channel from fiat currency to cryptocurrency, which is currently mainly limited to Tether - at least based on real-time data we can monitor.

Overflow effect: Coinbase IPO and FTX's new owner

Due to the expected initial public offering (IPO) or direct listing of Coinbase on April 14, 2021, the price of Bitcoin has surged to $61,500. All parties are coordinating to hype up the market as much as possible. Market commentator Jim Cramer tweeted that "our bullish price target for Coinbase is $475," which provides the company with a valuation similar to Goldman Sachs. Although the company's reference price is $250 per share, many (mostly retail) investors believe they can buy stocks at that level, thereby valuing the company at $65 billion. With the strengthening of media coverage, IPOs often bring tremendous momentum to an industry, and Coinbase has attracted the most customers in the pre-IPO stage.

The opening price of the stock was $381, with a high of $429.5 and a closing price of $328 on the first trading day. Today, the stock price is $88, which is 77% lower than the direct listing price, with a market value of $21 billion. Coinbase has approximately 98 million users, with 9 million people trading on Coinbase every month.

Chart 4: Debt-FTX debt valued by creditor value percentage has doubled this year

One year ago, when FTX crashed, Coinbase had a market value of $12 billion. In the last round of financing, FTX was valued at $32 billion and reportedly had 8 million registered users, including 5 million active users. Despite Sam Bankman-Fried's scandals and recent convictions, the FTX brand and its user base still have significant value. By December 2023, the new owner may take over the exchange. We believe that the selling price of FTX could be between $200 million and $3 billion, considering the number of registered users and its global brand awareness, which is an attractive price. Customer loss is mainly attributed to SBF's core circle, while the brand value of the exchange remains relatively intact.

Matrix on Target expects to be acquired by the little-known cryptocurrency exchange "Bullish". With sufficient funding through Block.one ownership and good connections with well-funded investors, "Bullish" suffers from a severe lack of active user base (and an urgent need for a better name, in the humble opinion of "Matrix on Target"). The price tag of FTX may continue to benefit FTX creditors. According to some estimates, the trading price of FTX creditor rights is higher than 55 cents, and this is before the explicit news of the sale of the exchange to another investor. SEC Chairman Gensler also indicated that FTX may be relaunched under new leadership. This indicates that cryptocurrencies will continue to exist and the SEC has not explicitly ruled out cryptocurrencies. The new owner may use a lot of marketing resources and offer incentive fees to retain the exchange's users. This will create great motivation and benefit the overall sentiment of the cryptocurrency market.

Circle's IPO Ambition and Tether's Astonishing Market Cap Growth

It is expected that stablecoin issuer Circle will also restart its IPO plan. At the end of 2022, a SPAC (special purpose acquisition company) transaction failed, which aimed to value the company at $9 billion, indicating that cryptocurrency operators are increasingly confident that the cryptocurrency bull market will continue until 2024 or longer. However, investors who are critical may point out that Coinbase's IPO occurred when the market was close to its absolute peak, leaving many investors "waiting to lose."

Over the past 12 months, Circle's USDC market capitalization has dropped by -47%, from $45 billion to $24 billion. Most of the decline occurred in March 2023 when the US government seized three important banks for cryptocurrency investors. Circle itself was also in trouble as at least one of the three banks held billions of dollars. However, despite (or because of) providing regular audit details and working closely with US regulators, investors still prefer Circle's big brother - USDT.