Bitfinex, in its 52-page “Bitfinex Alpha” report, has shared an optimistic outlook for Bitcoin and the broader crypto market as we head into 2024. Despite facing reputational and regulatory challenges in 2023, Bitcoin has demonstrated remarkable resilience, leading Bitfinex to maintain a positive stance on its future.

Market Fluctuations and Growth Potential: Bitfinex acknowledges the likelihood of market pullbacks, a common occurrence based on historical market behavior. With the crypto market’s total capitalization around $1.6 trillion, Bitfinex projects the possibility of it reaching as high as $3.2 trillion, with values fluctuating within this range.

Sentiment Indicators and Institutional Investment: The report points to various metrics and sentiment indicators, predicting a probable shift to “extreme greed” sentiment in 2024, correlating with new highs for Bitcoin. Bitfinex anticipates increased institutional investment in crypto assets, particularly driven by the long-awaited spot Bitcoin ETF, which is expected to be a significant catalyst. However, the report suggests that institutional investment will likely continue to favor Bitcoin, at least through the first half of 2024.

Bitcoin Valuation and Miner Activity: The report examines Bitcoin’s market value in relation to its realized value, using the MVRV metric. Current valuations are compared to periods like June 2019 and July 2016, which experienced initial price dips followed by recoveries. Bitfinex expects a similar pattern, with potential pullbacks before a sustained upward trajectory.

Halving Year and Miner Profitability: 2024 being a halving year for Bitcoin, Bitfinex highlights the importance of monitoring miner activity. The halving will reduce the Bitcoin earnings for miners, necessitating efficient and profitable operations. The Puell Multiple analysis indicates a healthy market state, suggesting room for growth in Bitcoin prices with limited selling pressure from miners.

Global Adoption and Macroeconomic Outlook: The report also touches on Bitcoin adoption in markets like El Salvador and Argentina. It mentions that in El Salvador, gradual adoption continues, with a focus on infrastructure development for Bitcoin transactions. It sees Argentina’s economic volatility and high inflation rates as drivers for increased crypto adoption as a hedge against currency devaluation.

Global Cryptocurrency Ownership and Economic Trends: Bitfinex predicts a significant increase in global cryptocurrency ownership, potentially reaching between 850 and 950 million users by 2024. Per Bitfinex’s report, the macroeconomic outlook remains positive, with expectations of decelerating wage growth and a moderate increase in the unemployment rate. The report adds that inflation rates are projected to decline, supported by factors like improved supply chains and a subdued global economy.

Inflation and Recession Risks: The report states that while core inflation in the U.S. is expected to fall, geopolitical tensions and oil production cuts could increase headline inflation. It claims that avoiding a recession in 2024 is still uncertain, and a return to the ideal two percent inflation rate is not guaranteed. Bitfinex anticipates a headline inflation rate of around 2.9 percent by the end of 2024.

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