Bitcoin's Triumph: Why 2024 is the Magic Year

• The Transformative Landscape of Digital Assets in 2024
• Boost in Demand for Bitcoin
• Supply Side Changes: The Halving Effect
• Last Halving Event & Its Aftermath
• Investment Case for Bitcoin
• Reshaping the Future of Digital Assets

The Transformative Landscape of Digital Assets in 2024

The year 2024 is set to be a transformational year for digital assets at large, especially for Bitcoin$42,260 -0.64%. With the recent SEC approval for a spot Bitcoin ETF and the imminent halving event in April, substantial shifts in both the supply and demand of this popular cryptocurrency are expected. A firm grasp of these changes is essential to comprehend the future role of digital assets in fostering global financial accessibility.

Boost in Demand for Bitcoin

The anticipated approval of a spot Bitcoin ETF by the SEC is likely to pave the way for several new investors. These investors, eager for direct price exposure to Bitcoin, can now bypass the intricacies of crypto exchanges and opt for a familiar investment tool- an ETF. This development is not only expected to fuel higher liquidity but also to enhance bitcoin's price stability. Furthermore, the SEC's endorsement signifies a crucial landmark for Bitcoin, indicating its growing acceptance among established financial entities.

Supply Side Changes: The Halving Effect

Every four years, Bitcoin's scarcity surges due to a process known as halving. In this process, the reward for Bitcoin miners is reduced by half, causing a 50% decrease in new Bitcoin issuance. The forthcoming halving event in April 2024 will lower the block reward to 3.125 from the current 6.25. Historically, this event has triggered substantial BTC price hikes in the subsequent months and years (as illustrated in the chart).

Last Halving Event & Its Aftermath

The most recent halving took place on May 11, 2020, bringing down the block reward from 12.5 BTC to 6.25 BTC. Since then, Bitcoin has experienced a compound annual growth rate of 52%, with the steepest rise witnessed during the first nine to twelve months post the halving. The halvings prior to 2020 have followed a similar pattern.

Investment Case for Bitcoin

The amalgamation of these factors presents a compelling investment case for Bitcoin, providing a potential entry point. Using the stock-to-flow model-which attempts to calculate the value of an asset with limited supply- an implied value of approximately $62,000 per Bitcoin is projected in April 2024. This represents an approximate increase of 34% relative to the current price as of January 10.

Reshaping the Future of Digital Assets

The landscape of digital assets, particularly Bitcoin, is poised for significant transformation this year. The SEC's approval for a Bitcoin ETF and the impending halving event in April are set to redefine the supply and demand dynamics of Bitcoin. For an in-depth exploration of the disruptive potential of digital assets, Global X recently released its annual Charting Disruption report, delving into the trends and technologies that will shape future economies.

Edited by Jonathan Stoker