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In analysis shared on Greer’s insights are based on a combination of historical performance data, current market dynamics and broader macroeconomic factors, all of which she believes create a very favorable environment for Bitcoin.
Here’s why Bitcoin could skyrocket to $118,000
Greer begins by highlighting Bitcoin’s robust historical performance in the fourth quarter (Q4) of previous years. She highlighted that as of 2020, Bitcoin’s average return to its intra-quarter high in Q4 is around 85%. This figure takes into account the best-case scenario, where the return was a staggering 230%, and the worst-case scenario, where the return was 12%.
“Average BTC return in Q4 (up to max [intra quarter high watermark, full q return]) as of 2020 is +85% (worst -12%, best +230%) — keep pushing to find a stronger asymmetry,” writes Greer. This statistical asymmetry suggests significant potential upside versus downside, making the fourth quarter historically a period of robust growth for Bitcoin.
Just an average fourth quarter with a price enhance of 85% could mean Bitcoin’s year-end price at $118,000. If BTC breaks its record of 230%, the price could even rise well above $200,000.
It is worth noting that Greer believes that the current market is not fully prepared to realize this potential. He attributes this under-allocation to several key factors. First, there is concern about the upcoming US presidential election scheduled for November 5. Second, other assets such as gold and Chinese A-shares are attracting significant attention and capital, potentially diverting investment away from Bitcoin.
“I still don’t think the market is properly allocated – 2024 is a unique case where some portion of the market under-indexes Q4 asymmetry due to a) November 5 US election risk and/or b) other assets screaming (gold, Chinese A-shares, etc.),” notes Greer.
Key reasons to be bullish on BTC
To support her assessment of the current market position, Greer cites her interactions with risk managers and notes specific market indicators. She mentioned the observation of “low volatility and limited perp funding,” which suggests investors are not betting aggressively on significant price movements.
Beyond these market dynamics, Greer identifies several macroeconomic and industry-specific factors that she believes create an “overall very positive” backdrop for Bitcoin. An crucial issue is the presence of global stimulus measures in major economies such as the United States and China, excluding Japan.
Greer also highlights that BNY Mellon, the world’s largest custodian bank, has received an exemption from SAB 121. This exemption allows the bank to offer Bitcoin custody services without the stringent capital requirements that previously made such services less attractive. Greer describes this development as “enormous and underappreciated” and notes that it will “significantly weaken funding for our industry.”
Additionally, Greer points out that ETF flows have become “very constructive.” Over the past few days, BTC inflows in the spot market have accelerated significantly again. Last Friday, net flows were $494.8 million, making it the highest day of net inflows this quarter and the highest day of net inflows since June 4.
Another positive indicator is that Bitcoin miners are striking deals with hyperscalers – large-scale cloud service providers. These partnerships can enhance mining efficiency and reduce operating costs.
Greer also mentions that “oversupply [are] mostly done,” suggesting that gigantic sales that could lower the price are unlikely in the near term. He further anticipates that “demand from FTX cash distributors [is] around the corner”, which means that funds distributed from the FTX exchange can go into Bitcoin investments, further increasing demand.
However, Greer also acknowledges that potential risks could impact Bitcoin’s trajectory. These include signals from the Federal Reserve regarding monetary policy and the possibility of a pullback in stock markets. Such events may introduce volatility or dampen investor enthusiasm.
However, he believes that the overall mood remains positive. “There are certainly risks – Fed signals, pullbacks, whatever – but net sentiment is quite good and flows are just starting,” he notes.
Greer also describes Bitcoin as a “reverse asset.” He explains: “BTC is the ultimate reflective asset: price -> flows -> price.” This means that as the price of Bitcoin increases, it attracts more investment flows, which in turn causes the price to enhance even more – a self-reinforcing cycle.
Greer notes that Bitcoin is entering the fourth quarter after breaking through the key price level at $65,000. If the price breaks above $70,000 again, inflows are expected to accelerate as investors respond to the positive momentum and recall previous years’ robust fourth-quarter results.
At the time of publication, the price of BTC was $63,947.
Featured image created with DALL.E, chart from TradingView.com