What's Next for BTC and Co?

Since reaching a new peak of ~$74K, Bitcoin has slumped over 9%. Whether the cryptocurrency can regain lost ground or dive into a prolonged downturn remains to be seen.

BTC Volatility Likely Ahead

Bitcoin hit a new high last week, reaching $73835 before plunging back to around $65565. Based on prior cycles, the cryptocurrency reached an all-time high earlier than predicted, as it tends to surge after halvings when the supply of new bitcoins decreases. The next halving is expected in April 2024, and many believe prices moved higher to price in the event. However, others say that reaching a record high sooner than anticipated may be attributed mainly to the launch of Blackrock's Bitcoin ETFs.

Bitcoin rebounded following the recent drop as investors appeared confident in buying the dip. However, the Fed may weigh on BTC's price at their upcoming FOMC meeting as concerns over inflation persist. Hotter-than-expected PPI and rising US bond yields pressured Bitcoin. In addition, data suggest that 86% of Bitcoin holders are in profit at current prices, increasing the likelihood of a sell-off as traders book profits and leveraged positions get liquidated.

Expectations Going Forward

There are wide-ranging price predictions for Bitcoin, from a drop to $42K in the near term to a potential rise to $1 million by 2030. Overall, experts remain bullish on Bitcoin, citing continued demand from retail investors and ETFs. However, they also expect volatility to continue in the short term. Medium-term forecasts show Bitcoin could reach $150K by mid-2025, with demand from ETFs and the Bitcoin halving event driving gains. Michael Saylor of Microstrategy said Bitcoin will continue to take market share from gold due to its digital advantages, and supply constraints after the halving will fuel further gains.

A majority of analysts point to the potential approval of Ethereum ETFs as a catalyst for unlocking more demand. The ETH ETF is expected to be approved or rejected by the SEC in May 2024. Bloomberg analysts have lowered their estimates of approval to only 30%. Earlier, estimates showed an approval rate of 50-60%. Although Bitcoin has been dominating attention recently while Ether has been lagging behind, some analysts believe ETH could more than double this year. According to Bernstein analysts, Ether's deflationary supply, staking activity, and Decentralised Finance (DeFi) growth support higher prices for Ether.

Ethereum

Ethereum is trading around 35% lower than its all-time high of $4880, leaving the potential for a double-top pattern to form. However, since breaking above $2,100 and the swing of 2700, it has seen fast moves, which could give way to near-term corrections. Maintaining a price of $3000 could provide the catalyst for a new all-time high above $4000. Otherwise, the pair may consolidate between its round levels unless bears gain control.

Source: SpreadEx / Ether

Key Takeaways

Bitcoin hit a new high last week before plunging, but experts remain bullish in the long term, citing demand growth from the ETFs. However, they also expect continued short-term volatility, given macroeconomic factors. Medium-term forecasts show Bitcoin will reach $150K by mid-2025. Approval of an Ethereum ETF is also a potential catalyst to unlock more demand, with a decision expected in May 2024. Given its distance from highs, Ethereum has performed worse, but this lag may be the catalyst for a potential upside. In the long term, many remain bullish due to its deflationary supply and growth in DeFi.