If you were asked to project ideal market conditions for Bitcoin, you couldn't do better than October 2024.
China started Pumping up its economy With $284 billion worth of stimulus spending for consumers, banks and businesses. The Federal Reserve cut its benchmark interest rate by 0.5% as inflation moderated.
And the US economy grew at a 3% per annum In the second quarter, that means the Fed will probably make more cuts next year.
The sound we should hear is the thunder of a bull stampede.
Instead all we have is a big… meh.
Bitcoin has skidded 4.3% since China unveiled its qualitative easing measures on September 25. The cryptocurrency is up just 1.9% since the Fed cut rates on September 18.
What gives? Where's the mojo? Shouldn't Bitcoin Rocket to $100,000?
Digital gold
Analysts suggest that this week's Iranian missile attack on Israel and the escalation of hostilities in the Middle East are the main reasons BTC and other cryptocurrencies have been so sluggish.
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At first glance, this makes sense.
Fears of a regional war in the Middle East have again gripped the markets and, as is often the case in these crises, panicked investors are piling in. gold.
The precious metal has gained 29% this year, while BlackRock's Bitcoin exchange-traded fund, IBIT, has seen a 25% increase.
But geopolitical turmoil should be equally bullish for Bitcoin, right?
Last month, BlackRock published a A widely read report Bitcoin is being hailed as a “special diversifier” against the economic, monetary and geopolitical risks that affect stocks, bonds and other traditional assets.
If all those assets collapse, Bitcoin should hold the line or rise.
This idea that Bitcoin is digital gold has been around forever, it just doesn't hold up.
When US consumer prices rise to 40-year highs in 2022 and 2023, Bitcoin offers no shelter when it falls into a bear market. That should be the moment when Bitcoin proves its worth as an asset that is not completely disconnected from economic dynamics.
Instead, BTC began to move in tandem with Fed monetary policy. Point out the sarcasm.
The Holy Grail of Crypto
Now bitcoin outlook 2022 is very rosy from those dark days. It's not just the Fed and China.
On the regulatory front, crypto appears to have been relieved of a three-year-long crackdown led by Gary Gensler, the crypto-doubting chair of the US Securities and Exchange Commission.
Both Donald Trump and, more quietly, Vice President Kamala Harris, have signaled a less aggressive approach to the asset class if they win the White House in November.
Moreover, the quest for crypto's holy grail, mass market adoption, is progressing.
Not only have BlackRock, Fidelity and other Wall Street giants launched bitcoin and ethereum ETFs this year, but a number of big names and fintechs are making key moves.
Just this week, SWIFT controls the banking consortium $200 billion The cross-border payments system, central banks and commercial lenders said they can now test transactions of digital currencies on the network.
And Visa is the latest player to join Tokenization push With the launch of a platform designed to house real-world assets onchain.
Does it matter? Let's be honest. Bitcoin is an irrational asset. The crypto market doesn't just react to signals like, say, stocks. Many basics like earnings are missing.
Now everything is very rough, but even the consequences before that, as we saw with the recent Fed rate cut, are not the sure thing.
One more constant – patience.
Unusual performance
In its report, BlackRock pointed out that Bitcoin has outperformed all major asset classes in seven of the last 10 years and has returned 100% on an annualized basis over the past decade.
The cryptocurrency delivered this extraordinary performance, but it had the worst performance in the other three years of the decade, with four sales exceeding 50%.
In other words, good things come to those who hold on.
Unsurprisingly, the authors of the report argue that Bitcoin's original value proposition remains intact – growing concerns around US financial stability and global monetary and geopolitical conditions will drive BTC buying.
hmm You could probably write an essay on why that doesn't happen. But that is not the point.
If Bitcoin's record shows anything, investors don't need a case. They need no argument or fundamentals. And they don't need a rational reason to buy (or sell).
After 15 years, the market has made peace with Bitcoin's obscurity. While efforts to explain its behavior are endless, the only thing investors can count on is waiting.
Take a look this year.
For all concerned in the latter part of 2024, Bitcoin is up 46%. Even if investors growled, it should be higher given all the bullish measures, more than double the S&P 500. 20% performance.
Edward Robinson Ki story editor News. The opinions expressed in this op-ed column are his own. Contact the author at [email protected].
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