Bitcoin Forecasts for 2024

The end of the year is fast approaching, and several factors have marked the one that has just passed for Bitcoin. We will take this opportunity to highlight these key elements and look at the possible Bitcoin forecasts for the year 2024.

Bitcoin’s Strengths For 2023

There have been several catalysts during 2023 that have had a significant impact on Bitcoin. We are going to highlight some of these key points. 

In March 2023, following the regional banks’ crisis, the Fed came to the rescue to avoid a catastrophe. Bitcoin, being very tied to liquidity, reacted positively. Another key element of the year was the slowdown in inflation, which improved consumer sentiment. When sentiment improves, it encourages investors to take more risks. 

Another catalyst that really drove the evolution of Bitcoin’s price in 2023 remains the anticipation of a spot Bitcoin ETF approval by the SEC. Each speculation generated spikes in volatility both upwards and downwards.

The cyclicality of Bitcoin

Like the majority of assets, Bitcoin is quite cyclical. That is to say, it is composed of bull runs and bear markets that are well-defined. These cycles are often similar to the cycles of acceleration and slowing of economic growth. Moreover, Bitcoin is often one of the assets that give an early signal of an economic growth cycle peak since it is often the first to decline. Every bear market corresponds to a growth peak followed by the beginning of an economic slowdown. You can see it in the chart below:

Generally speaking, Bitcoin’s bear market cycles are about 2 years. This means a downtrend can last 2 years. Bull run cycles are shorter.

The last bear market started at the end of 2021 with a bottom in October 2022. Consequently, we can deduce that the bear market cycle is behind us since it has been 2 years.

Pivot Anticipations

The years 2022 and 2023 were marked by inflation, geopolitical issues, and monetary policy. Of course, these factors influence investor behavior, leading to a lot of consumer and investor reluctance. The latest Federal Reserve central bank communications made it clear that we are at the peak of the rate hikes and that they would probably proceed with several rate cuts during 2024. This anticipation of a pivot during the 4th quarter of 2023 has led to enthusiasm across all financial markets.

The Impacts of the Economic Environment

If we want to support a continuation of the movement, we must not disappoint the markets. That is to say, we must remain in a logic of soft landing assuming an environment of stable growth, continually slowing inflation, and a resilient job market. All this will help to continue improving consumer sentiment and thus attract investors. The worst-case scenario would be a deterioration of the economy with the delayed effects of monetary policy. This is also one reason why central banks have decided to pause for now. In this order of ideas, it is essential to know why the FED wants to pivot:

• Decrease in inflation? 
• Increase in unemployment? 
• Liquidity crisis?

Regarding the decrease in inflation, if it is not due to negative growth (economic deterioration + increase in unemployment), this may confirm the soft landing. In the case of a hard landing, everything will depend on the extent of the delayed effects of monetary policy on the economy. The data that will make a difference between a soft or hard landing will be the job market. So, this is the data that will need to be closely monitored for forecasts. For the moment, we have some resilience in terms of employment:

The impacts on the financial markets and Bitcoin will also depend on the valuations at that time. If valuations are very high without an economic rebound to justify this rebound and if we have a beginning of an increase in unemployment, there could be a more significant correction of valuations at that time since the entire rise would have been anticipated based on a soft landing that did not occur.

Analysis of Bitcoin From a General Perspective

There are several factors that can influence Bitcoin forecasts in 2024. We will list some of them:

• Liquidity
• Supply, demand (total Bitcoin supply of 21 million)
• Consumer sentiment
• The economic context (growth, inflation, job market)
• External events (positive or negative catalyst)
• The US dollar
• The halving

In terms of liquidity, we can see that the current liquidity is rather bullish, which is positive for Bitcoin. In the case of a recession, it should also increase and be a positive factor in the long term for Bitcoin.

Another important event for 2024 is the halving, which helps to reduce the available supply, which tends to be positive for Bitcoin as well. The cyclicity of the halving every 4 years is often related to the average economic cycle of 5 years.

Thanks to the slowdown in inflation, consumer sentiment has improved.

The possible approval of a spot ETF could be a positive factor in the long run as it will attract more flows and further democratize Bitcoin.

In terms of the economic context, everything will depend on the economy’s ability to withstand the delayed effects of monetary policy. For now, as long as unemployment remains resilient, it’s positive for the economy.

Technical Analysis of Bitcoin

For Bitcoin forecasts from a technical order and on a long-term basis, Bitcoin is above the 10-month moving average, which remains technically bullish. Even if we have excess deviations between the price and the moving average, the trend is still intact. Therefore, pullbacks remain buying opportunities.

Still on a technical order, the MACD trend indicator remains in positive momentum. On the other hand, the RSI oscillator remains above the 50 zone (bullish trend) but still far from the long-term overbought zone.

Possible Bitcoin Predictions for 2024

The best buying zones for Bitcoin remain the lateral areas. That is when volatility decreases, and the price stabilizes in a lateral zone after a bear market. Here are some examples:

Therefore, there is a high probability that the bottom for this cycle is behind us. And structurally and fundamentally speaking, Bitcoin remains bullish in the long term. Here are the possible scenarios:

Optimistic scenario: the soft landing is confirmed next year, and Bitcoin can persist towards the ATHs. Initially, Bitcoin could test the 65k and then the 80k, 100k. This kind of scenario assumes stable growth, a decrease in inflation without an increase in unemployment.

Pessimistic scenario: economic data deteriorates after the diffusion of monetary policy, and Bitcoin could retrace towards 25k-30k in case of deterioration in consumer sentiment. This kind of scenario could be possible if the level of unemployment increases.

Conclusion

Overall, Bitcoin forecasts are structurally bullish. Its utility and scarcity (21 million Bitcoins) make it a unique asset. And like any asset, Bitcoin goes through different cycles. It can also be added that the bear market cycle has passed, and we are in the thrust of a new cycle.