Bitcoin starts 2024 160% higher than a year ago — and arguably the year’s biggest news event is due within days.
BTC price strength endured over the yearly candle close, with no last-minute volatility disrupting either bulls’ or bears’ plans.
What’s next? The first half of January is set to be unlike any other in Bitcoin’s history — the deadline for approving the United States’ first spot price exchange-traded fund (ETF) is here.
Opinions over how markets will react to the decision — whether good or bad — are mixed.
Some believe that a green light will open the floodgates of institutional investment capital and that Bitcoin will never be the same as a result. Others see an ETF launch as ultimately a mixed blessing and that the immediate reaction to greenlighting it will be a snap BTC price retracement.
Two more important countdowns within the next 4 months than the one tonight #Bitcoin ETF— James Van Straten (@jimmyvs24) December 31, 2023
2024 is set to be significant throughout — just four months away lies Bitcoin’s next block subsidy halving, and on-chain data shows how miners are preparing for a shock to the system.
Network fundamentals are already starting the year right — data sees a 1.5% difficulty increase this week, taking it to new all-time highs.
That could easily change, however, as ETF tensions boil over — a rejection, after all, is not off the cards but is a scenario that many have begun to forget.
Will BTC break out upon spot Bitcoin ETF approval?
New year’s fireworks were distinctly absent from BTC price action as 2024 came around — BTC/USD greeted the new year well within an established trading range.
BTC/USD 1-hour chart. Source: TradingView
Volatility could easily have changed the mood around the close, but as throughout the Christmas period, no major trend continuation was on the table.
Analyzing how the first weeks of the year could shape up, market participants suggested that an ongoing lack of volatility could result in a breakout around the ETF decision. Among them was popular trader and social media commentator Matthew Hyland.
— Matthew Hyland (@MatthewHyland_) December 31, 2023
“I imagine we end up producing a symmetrical triangle over next few weeks and breakout from there,” popular trader Crypto Tony wrote in part of his year-end analysis on X (formerly Twitter).
Crypto Tony, like many others, added that altcoins now provide more of a focus than BTC, as the latter’s dominance of the crypto market begins to decline.
As Cointelegraph reported, this is a classic phenomenon during early Bitcoin bull markets — an initial push on BTC gives way to large-cap, then small-cap altcoins.
Last month, Hyland noted the phenomenon playing out according to plan, as confirmed to Cointelegraph in private comments.
“Dominance Weekly fell and closed below support,” his latest X content continued overnight.
“A dominance breakdown is one of the most bullish signals for the Crypto Market as well as Bitcoin.”
Bitcoin crypto market cap dominance 1-day chart. Source: TradingView
Hyland added that it is at this point that “the ascent to the cycle top starts to really begin” for BTC/USD.
Bitcoin ETF approval window starts this week
There is one thing and one thing only on every crypto investor’s mind this month: the U.S. spot Bitcoin ETF approval deadline.
Due by Jan. 10, this potentially momentous occasion has been marred in controversy for years.
The surprises have continued right until the new year — from industry reshuffling to constant meetings with U.S. regulators, the prelude to the spot ETF go-ahead feels like no other before it.
Plenty of nerves surround the deadline period. A common narrative calls for the announcement to spark a “sell the news” event, in which Bitcoin immediately drops as anticipation of the unknown drains away.
As Cointelegraph reported, targets for such a scenario commonly fall around $36,000, while others see a much more protracted downtrend beginning this month.
Among them is the infamous Il Capo of Crypto, who still sees $12,000 as a realistic BTC price level to aim for in the mid-term.
“We expect volatility and a possible correction in the mid-30ks in Q1 2024,” trading team Stockmoney Lizards revealed in part of its yearly predictions released on Dec. 31.
Stockmoney Lizards, which in recent months adopted one of the more positive BTC price perspectives, nonetheless sees a new all-time high coming before the end of 2025.
“We have taken into account macroeconomic factors as well (recession, inflation). However, this is ultimately not a bad thing for Bitcoin,” they continued.
“More and more people see (and will see once it’s mass adopted) Btc as ‘digital gold’ and an inflation proof asset that is a store of value in bad economic times. Therefore we do not believe that the current bull run is about to end soon.”
BTC/USD annotated chart. Source: Stockmoney Lizards/X
Markets: Fed “pivot” has months to go
On the topic of macro tides, the first week of the year will offer some welcome calm as Bitcoiners focus on the ETF.
Little by way of U.S. data prints are due, with the year’s first milestone — the Federal Reserve’s decision on interest rates — only coming at the end of the month.
Inflation is slanting downward, and a look at market expectations shows increasing preparations for a Fed “pivot” — beginning to dismantle two years of interest rate hikes.
Per data from CME Group’s FedWatch Tool, the odds of that occurring this month are nonetheless low, at just over 15%. More likely, markets are saying, is that current levels will remain through March.
Fed target rate probabilities chart. Source: CME Group
Considering how the rest of 2024 could play out, Jim Bianco, head of institutional research firm Bianco Research, eyed the implications of the U.S. presidential elections.
“Since 1994, the Fed has explicitly targeted the funds rates,” part of X commentary stated.
Bianco highlighted 1996, 2008 and 2020 as the key years in the intervening period.
“So, in the last 30 years, cuts in presidential election years have come mainly because everything is ‘hitting the fan,’ and the Fed is forced to act,” he continued.
“Will a ‘soft landing,’ if one actually happens, be enough for multiple rate cuts in an election year? Or will the Fed feel compelled to sit it out?”
When has the Fed cut rates in a Presidential election year?— Jim Bianco (@biancoresearch) December 27, 2023
Since 1994, the Fed has explicitly targeted the funds rates ...
2020 - drove rates to zero by February in response to the Pandemic/lockdowns
2008 - cut from 4% to zero in response to the Global Financial Crisis
As Cointelegraph reported, Bill Ackman, CEO and founder of hedge fund Pershing Square Capital Management, previously forecast the start of rate cuts in Q1.
All-time highs keep coming for Bitcoin fundamentals
Bitcoin network fundamentals are starting 2024 in the same vein as much of the previous year — in “up only” mode.
The upcoming difficulty readjustment will take competition among miners to levels never seen before. Per data from monitoring resource BTC.com, difficulty will rise around 1.5% to 73.1 trillion.
Bitcoin network fundamentals overview (screenshot). Source: BTC.com
December was already a bumper month for miner revenue. Ordinals helped push fees considerably higher than the multi-year average, leading to a daily revenue peak of over 1,500 BTC on Dec. 16.
The halving will be on every miner’s radar; in April, the block subsidy will drop 50% overnight to 3.125 BTC per block.
Miners have also been taking profit into the yearly close, as confirmed by data from on-chain analytics firm Glassnode. Since mid-October, the balance in miner wallets has dropped by around 12,000 BTC.
Bitcoin miner BTC balance chart. Source: Glassnode
A “greedy” start to the year
Against all this, crypto market sentiment — the aggregate estimate of each hodler’s behavioral mindset — is cautious.
“Greed” is what characterizes the average crypto investor at $43,000, according to the Crypto Fear & Greed Index.
Known as a the yardstick for measuring instances of overt bearishness at the bottom and “irrational exuberance” at the top, Fear & Greed currently sits at 65/100.
The index has shown itself to be very sensitive to BTC price action within the current range. Even smaller moves on BTC/USD can result in a significant shift in sentiment, which can quickly move toward “extreme greed” and thus signal that market upside may not have long to continue.
So far, however, the local highs at round 75/100 — last seen at Bitcoin’s 2021 all-time high — have acted as a ceiling.
Crypto Fear & Greed Index (screenshot). Source: Alternative.me