Adam Back, CEO of Blockstream, is optimistic about the future of Bitcoin (BTC) and believes that 2024 could be a turning point for the leading cryptocurrency. Back, a renowned cryptographer and pioneer of Bitcoin’s proof-of-work algorithm, recently stated in an interview that Bitcoin is currently lagging behind its historical price trend line observed during previous mining reward halving events.
Bitcoin’s block reward halvings occur every 210,000 blocks, reducing the block reward given to miners from 6.25 BTC to 3.125 BTC. Back suggests that when considering the average trends of previous market cycles and halvings, Bitcoin’s current value falls short of widely accepted projections.
The Impact of Market Challenges
Various factors have contributed to the decline in BTC’s price, affecting both traditional financial markets and the cryptocurrency space. Back explains, “The last few years were like biblical pestilence and plague. There was COVID-19, quantitative easing and wars affecting power prices. Inflation running up people, companies are going bankrupt.”
These market challenges have significantly influenced portfolio management and investment strategies. Investment managers have had to navigate risks and losses, often resulting in the sale of more liquid assets, including Bitcoin.
The Road Ahead: Positive Outlook for Bitcoin
Looking ahead to 2024, Back believes that many of the macro events that negatively impacted Bitcoin’s price have either subsided or been resolved. This is evident in Bitcoin’s recent price surge since November 2023.
Back states, “The wave of the contagion, the companies that went bankrupt because they were exposed to Three Arrows Capital, Celsius, BlockFi, and FTX — that’s mostly done. We don’t think there are many more big surprises in store.”
Back previously predicted that Bitcoin would reach $100,000 in the next market cycle, and he stands by this projection. He also references the Bitcoin “stock-to-flow” model developed by pseudonymous former institutional investor PlanB, which suggests potential upside for Bitcoin in 2024.
According to Back, astute Bitcoin investors historically purchased BTC six months before a halving event and sold during significant price surges that occurred in the 18 months following the reward reduction.
“People thought it was a bit of a crazy assertion that we might get to $100,000 pre-halving because I said it when the price was around $20,000,” Back said. However, the fact that Bitcoin’s price repeatedly hit $44,000 in December 2023 implies that his earlier prediction may not be as far-fetched as some initially believed.
Prominent investors and market analysts also highlight the potential impact of the approval of several spot Bitcoin exchange-traded fund (ETF) applications by the United States Securities and Exchange Commission (SEC).
Eric Balchunas and James Seyffart, senior ETF analysts, anticipate that these applications will receive the green light in early 2024. Michael Novogratz, co-founder of Galaxy Digital, also predicts significant institutional investment flowing into BTC-backed products, a sentiment shared by Back.
“I think Bitcoin could get to $100,000 even before the ETF and before the halving. But I certainly think the ETF shouldn’t be undervalued in its influence,” Back affirmed.
One key reason for this belief is that certain segments of traditional markets, including major fund managers like BlackRock and Fidelity, are currently restricted from directly investing in assets like Bitcoin.
