Bitcoin's Resurgence Expected in 2024, Says Blockstream CEO Adam Back
Summary:
Adam Back, CEO of Blockstream, has informed Cointelegraph that despite the challenges faced by Bitcoin (BTC) over the past two years, including the global pandemic, inflation, and regional conflicts, 2024 may see a resurgence in the cryptocurrency. Back, who developed the proof-of-work system applied in Bitcoin's protocol, suggests the next halving event in April 2024 could mark a turning point. He goes on to speculate that the introduction of a spot Bitcoin exchange-traded fund (ETF) could drive major capital inflows into the cryptocurrency market.
The last two years have seen Bitcoin's (BTC) value plummet because of the continuing COVID-19 pandemic, soaring inflation and localized conflicts. Yet, there is optimism simmering that 2024 could be a year of revival for the flagship cryptocurrency, suggests Adam Back, CEO of Blockstream. Back, who is credited with crafting the proof-of-work system utilized in Bitcoin's blueprint, informed Cointelegraph that Bitcoin is currently underperforming when compared to the established price trend line of previous mining remuneration-halving events.
Back weighed in on Bitcoin’s prospective performance in the lead up to the next halving scheduled for April 2024. This event will see Bitcoin miners' block compensation halved from 6.25 BTC to 3.125 BTC. Halving of block rewards are integral to Bitcoin's architecture, occurring after every 210,000 blocks are mined.
Back underlines that there are several factors that have pushed down BTC's price, many of which are prevalent across conventional financial markets. He says, "We've experienced problems akin to biblical plague and disaster - COVID-19, quantitative easing, wars affecting the price of power, rampant inflation leading to company bankruptcies."
By Back’s account, these disruptions have critically impacted financial markets and investment strategies. Asset managers have been forced to balance risk and losses over the past couple of years, often leading to the sale of more liquid assets. "They need cash, and will sometimes sell quality assets because they're liquid - Bitcoin is extremely liquid. This used to happen with gold and I believe it's also a factor for Bitcoin over the last couple of years,” he elucidates.
Despite these setbacks, Back remains bullish on Bitcoin's prospects. As we approach the end of 2023, many of the macro events Back alluded to have subsided. This has translated to the recent price rally of Bitcoin beginning from November 2023.
Blockstream's CEO continues to stand by his earlier prediction that Bitcoin would hit the $100,000 mark in the next market cycle, attributing its failure to reach this point to the aforementioned factors.
Back also highlighted the Bitcoin “stock-to-flow” model devised by anonymous former institutional investor PlanB as a potential metric indicating Bitcoin's future price growth.
Back is of the opinion that his earlier prediction of Bitcoin hitting $100,000 may not be as outlandish as it first appeared, given that Bitcoin's price touched $44,000 several times in December 2023.
Market observers and high-profile investors are also closely watching the potential approval of multiple spot Bitcoin exchange-traded fund (ETFs) applications by the U.S. Securities and Exchange Commission (SEC).
Senior ETF analysts Eric Balchunas and James Seyffart, as well as Galaxy Digital’s co-founder Michael Novogratz, are also optimistic about approval in early 2024. Back mirrors this sentiment, stating, "I believe Bitcoin could reach $100,000 before the ETF and halving event. However, the power of the ETF should not be underestimated."
He goes on to suggest that major segments of traditional markets, like fund management firms BlackRock and Fidelity, are currently prohibited from directly investing in assets such as Bitcoin. This is why the introduction of a spot Bitcoin ETF could result in substantial capital flowing into the cryptocurrency market. The product could entice a broad range of funds, especially in the U.S., to get some exposure to Bitcoin, particularly via reputed institutions like Fidelity or BlackRock rather than local cryptocurrency exchanges.
Published At
12/15/2023 3:00:34 PM
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