Volatility in the crypto market is returning to normal, with demand for Bitcoin declining and the supply of new issues halved since the halving.
This is determined by the absence of narratives that can fuel short-term interest, with investor flows oriented towards "fresher" and more attractive narratives, such as the electrification of data centers to support the development of AI (the "Power up America" sector is among the top performers in 2024).
The result of this dynamic is an erratic Bitcoin price action at the mercy of derivatives, which follows mostly speculative logic with a short-term perspective.
However, I am still constructive on Bitcoin as current market conditions appear very robust. To confirm this thesis, there are notable outflows from exchanges, with Coinbase recording one of the largest outflows of 2024 in recent days.
In the immediate term, I think the most likely outcome is a long and drawn-out consolidation phase, until new catalysts come back into play.
It's not just me who thinks this way; many confidential reports from large investment banks are circulating which envisage very interesting scenarios for Bitcoin in the medium to long term.
Below are some key points from a report by Standard Chartered Bank:
1. Bitcoin will certainly benefit from the US fiscal dominance policy.
2. US debt and public deficits appear to be on an unsustainable path.
3. This should push the price of Bitcoin higher, with investors looking for alternative assets.
4. A second Trump administration could provide a more "crypto-friendly" regulatory framework, benefiting digital assets.
5.(...) This adds to our already bullish medium-term outlook on Bitcoin: we reiterate our target price levels for late 2024 and late 2025 at $150K and $200K respectively." (Standard Chartered Bank).
I think there is very little to add.
Written by Cristian Palusci