In a recent comprehensive report from Capriole Investments, Charles Edwards presents a compelling argument for why 2024 will be a pivotal year for Bitcoin, potentially delivering the highest returns in the current four-year cycle. The report delves into multiple facets of Bitcoin’s future, including its role as an inflation hedge, the upcoming halving event, and the impact of upcoming ETF approvals.
A Confluence of Catalysts for Bitcoin
Edwards begins by addressing the skepticism surrounding Bitcoin’s performance as an inflation hedge. “Bitcoin is getting a tough rap for its performance from 2021 amid growing inflation,” he notes. Contrary to popular belief, Edwards claims, “Bitcoin was a great inflation hedge – and that was when it was needed.”
He highlights Bitcoin’s impressive 1000% increase between Q1-2020 and Q1-2021, surpassing all other asset classes. This increase, he explains, was in direct response to the Federal Reserve’s multi-trillion dollar quantitative easing packages announced in March 2020. “The markets are moving incredibly fast and forward-looking these days. As soon as macro announcements are made, the pricing starts,” says Edwards.
Edwards draws a comparison between Bitcoin and traditional hedges, pointing out that Bitcoin’s performance during the liquidity boom was unprecedented. “There is no doubt that Bitcoin has dominated the crisis as the best inflation hedge,” he states, adding: “There is no second best. Bitcoin was the biggest inflation hedge we have ever seen.”
The second crucial catalyst for Bitcoin is the expectant halving in April 2024. Stressing the severity of this event, Edwards states: “Bitcoin’s upcoming halving in April will see Bitcoin supply growth fall to 0.8% per annum and below that of gold for the first time ever ( 1.6%).” This means that “Bitcoin will become harder than gold for the first time in April 2024.”
Addressing the common argument that the halving is already priced in, Edwards says: “If there’s one thing we’ve learned from Bitcoin’s past, it’s that the halving has never been priced in.” He states that an 80% cycle decline will wipe out all interest in Bitcoin. Additionally, Edwards draws parallels to previous cycles, noting that many on-chain metrics indicate that the current cycle exactly mirrors those of 2019 and 2015.
Third, Edwards also addresses the regulatory landscape, highlighting the clarity brought about by the CFTC’s classification of Bitcoin as a commodity in 2021. He also mentions the important announcement of Blackrock’s Bitcoin ETF filing and the ruling of the federal court of appeals. order for the SEC to reconsider its rejection of the Grayscale spot ETF. His basic expectation is that the SEC will approve the spot ETF in October 2023 or January 2024.
Edwards discusses the potential impact of ETFs on Bitcoin and draws a parallel to goldnoting the significant bull run that followed the approval of the Gold ETF in 2004. “When the Gold ETF approval hit, it was followed by a massive +350% return, a seven-year bull run,” the analyst noted, adding adding, “So we have three incredible catalysts ahead,” he says, listing the upcoming halving, the upcoming ETF approvals, and Bitcoin’s status as the best inflation hedge.
In conclusion, Edwards presents a bullish but cautious outlook. While he acknowledges the short-term bearish signals, he remains optimistic about the long-term prospects. “In Bitcoin’s four-year cycles, there are typically 12 to 18 months where 90% of the returns occur, followed by 2 to 3 years of sideways and downwards,” he notes, adding: “I expect the highest returns of This year’s cycle will be 2024 and I believe the data supports this statement.”
At the time of writing, BTC rose to $26,246, up 1.8% in the past 24 hours.
Featured image from iStock, chart from TradingView.com
