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Analyst sets $83,000 price target amid macroeconomic turbulence for Bitcoin

28 Mar, 2024

Bitcoin (BTC) experienced a recent all-time high of $73,750 on 14 March, but anyone who jumped on the Bitcoin train was in for a bumpy ride this week as it dropped from $70,719 to $68,430 on 27 March. At the time of writing on 28 March, the original cryptocurrency is still struggling to pass the $71,000 threshold. This can be chalked down to some global macroeconomic factors creating uncertainty that slowed down enthusiasm for risk assets like cryptocurrency. However, analysts are confident that the Bitcoin bull run will be sustained in the lead-up to April's halving. Let's take a look at the most important factors in BTC this week.

Bitcoin spot ETFs inflows bounce back, BlackRock bullish on BTC

The influx of funds into Bitcoin spot ETFs, the hottest new crypto instrument for institutional investors, is held as one of the key factors behind Bitcoin's March price gains and should be monitored by retail traders for its influence on BTC's price trajectory. Despite a rally leading up to 27 March, only $151 million in leveraged short positions were closed in BTC futures markets, indicating cautiousness among bears despite a significant $888 million withdrawal from US Bitcoin spot ETFs.

While Bitcoin demonstrated resilience by rebounding from a 17.6% decline without alarming spot ETF investors, some market observers attribute BTC's previous high to unexpectedly high spot ETF inflows. The recent reversal in spot ETF flows, recording $418 million in net inflows on 26 March, underscores genuine institutional demand, even as BTC struggles to climb past its $71,000.

BlackRock CEO Larry Fink expressed strong optimism about the performance and future of the iShares Bitcoin Trust (IBIT) ETF, citing its rapid asset growth and liquidity. IBIT has amassed $17.1 billion in Bitcoin holdings, reaching $10 billion in just two months. Despite fierce competition, IBIT ranks second in Bitcoin holdings among approved ETFs. While some industry experts foresee challenges for smaller ETF issuers, such as profitability concerns, the market continues to expand with new entrants like Hashdex's recently approved spot Bitcoin ETF.

"I'm very bullish on the long-term viability of Bitcoin," the BlackRock CEO confirmed.

Analyst sets $83,000 price target in the face of macroeconomic turbulence

Analysis of top traders' BTC long-to-short ratios on exchanges reveals a decrease in optimism despite price increases, possibly influenced by various factors dampening bullish sentiment. The decrease in preference for leveraged BTC long positions aligns with simultaneous all-time highs in various asset classes, suggesting market anticipation of a weaker US dollar. This, along with external pressures such as regulatory actions from lawmakers and the discussions in the EU about limiting cryptocurrency payments, reflects broader economic recession concerns. However, it shouldn't necessarily signal Bitcoin trading below $69,000.

Global economic concerns, particularly uncertainties surrounding the US Federal Reserve's interest rate decisions, are cited as impacting Bitcoin's performance. The failure of the S&P 500 index to maintain its all-time high and uncertainties about Fed interest rate cuts contribute to investor unease. While rate cuts are generally seen as positive indicators for crypto assets, signals from national banks around the world have hinted that higher interest rates may continue for the time being, which may have caused certain bullish investors to step on the brakes. The next Fed meeting to confirm rate adjustments isn't until 1 May, well after the BTC halving.

On the positive side, one macro factor recently mentioned by analytics firm 10x Research is that Bitcoin tends to do especially well in US election years (one of which we are currently in), historically gaining 100%-200% in previous incidences. That, along with BTC's recent breakout past $68,000, leads 10x Research to predict upside price targets of upside targets of $83,000 and $102,000 for Bitcoin.

Bitcoin in the "middle of a bull run", declares Grayscale

Determining the onset of crypto bull runs is challenging, although historical patterns show that BTC price often peaks 8-11 months following a Bitcoin supply halving event. A recent report from Grayscale identified key elements characterising bull markets, dividing them into precursor phases and the "fifth inning", representing the current market position.

According to the report, the precursor phase typically involves a surge in Bitcoin dominance, signalling its role as a leading indicator for the broader crypto market. This is followed by a rally in altcoins, driven by investors seeking higher returns buoyed by profits from Bitcoin. Notably, the recent bull run distinguishes itself with unique catalysts, including spot Bitcoin ETF inflows, positive stablecoin inflows, and a decrease in BTC balance on exchanges.

Spot Bitcoin ETF inflows significantly influenced positive market dynamics, surpassing BTC issuance by a considerable margin and exerting upward pressure on prices. Healthy on-chain fundamentals, such as the supply of stablecoins on exchanges, have also contributed to BTC's recent price rally.

Stablecoin liquidity growth indicates increased capital availability for trading, typically fuelling bull market momentum. Additionally, a decrease in Bitcoin supply on exchanges, with a notable decline in BTC held in known exchange wallets, suggests a supply squeeze, partly due to spot Bitcoin ETFs transferring BTC into custodian cold wallets for long-term storage.

Grayscale uses a baseball analogy to describe the current market phase as the "fifth inning" or mid-phase of the bull run. Analysis of the Net Unrealized Profit/Loss (NUPL) ratio suggests a potential cycle high, indicating investors holding onto their coins despite price increases.

While bull markets are often characterised by euphoria and FOMO-driven speculative trading, retail investor interest, as indicated by data from Satiment and Google Trends, remains relatively subdued compared to previous cycles. However, sentiment analysis suggests a resurgence similar to those seen during the 2021 bull market peak, potentially indicating a return of retail investors.

Grayscale believes the bull run will persist but advises caution and monitoring of spot Bitcoin ETF flows and macroeconomic factors for signs of market shifts. Despite progress, there is still "room left to run", according to Grayscale analyst Michael Zhao.

Get ready for the Bitcoin bull run with StormGain

Multiple industry analysts suggest that while the upcoming Bitcoin halving in April will reduce daily BTC production, its impact may be overshadowed by other factors driving phenomenal gains for the cryptocurrency. Daily inflows and outflows in crypto exchanges and ETFs far exceed the supply cut. Expectations of softer monetary policy and geopolitical uncertainties could further boost Bitcoin's appeal. Despite the recent retrace, historical trends suggest post-halving rallies, reinforcing optimism for Bitcoin's future.

In the current environment, retail investors and traders need to strike the right balance between excitement and volatility. This means diversifying portfolios, managing risks effectively, and considering factors such as inflation, macroeconomic trends, and underlying technology. Staying informed and having a clear strategy is crucial in avoiding emotional trading, which can lead to impulsive decisions, especially in volatile markets.

Of course, the most important factor in trading success is having easy access to the market in the first place. That's where StormGain comes in. As an all-in-one crypto trading and investment platform available on the web or an easy-to-use smartphone app on iOS and Android, StormGain gives you the best of the crypto market at your fingertips. This includes the top crypto assets from Bitcoin to Ethereum (ETH), Solana (SOL), and all the best altcoins, as well as risk management assets such as curated crypto indices and tokenised stocks for a diverse portfolio.

In addition to providing user-friendly access to crypto assets, StormGain also helps you level up your trading game with up-to-date trading signals and market indicators, as well as educational content, trading tips, and tricks for beginner to expert levels. More than just a trading app, StormGain offers secure wallets, staking rewards, and even an integrated Bitcoin cloud miner that rewards users with free BTC just for using the platform.

Not a StormGain user yet? Signing up is easy and just takes a few seconds. Register now and try a demo account to see how StormGain can help you maximise your crypto trading gains ahead of the halving!


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