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Financial Fundamentals

Bitcoin to $40,000 - Here's Why

β€” Alexandra Ardelean

Hey everyone, I'm Alexandra from Incorpo.ro and today we're going to talk about Bitcoin reaching new highs.

Bitcoin has reached a new high this year, over $40,000 a coin. This is still far from its peak in November 2021 of over $68,000. However, due to inflation, for Bitcoin to have the same purchasing power as in November 2021, it would need to be worth $76,145. This is because the dollar has lost value since then.

Even so, Bitcoin is now the ninth most valuable asset in the world. The top eight assets are gold, Apple, Microsoft, Saudi Aramco, Google, Amazon, Silver, and Nvidia. Bitcoin is more valuable than Berkshire Hathaway, Tesla, and Visa.

In this video we'll discuss why Bitcoin's price has increased and what could happen next.

The main reasons for the increase in Bitcoin's price are:

  • Interest rates
  • The upcoming event in April 2024
  • The potential approval of a spot Bitcoin ETF

The stock market and Bitcoin are forward-looking and responsive to projections about the future state of the economy. For instance, if the Fed announces plans to lower interest rates in anticipation of an economic slowdown, the stock market will likely rally in response.

This is why we need to look at what's happening with interest rates and other economic indicators to understand why Bitcoin's price is increasing.

The Fed's Beige Book is a qualitative report from 12 regional banks on the direction of the economy. The latest Beige Book suggests a significant economic slowdown over the next 6 to 12 months, which is why the market is optimistic about potential Fed rate cuts.

However, it may be overly so. The Fed may lower interest rates up to five times in 2024 and start quantitative easing (QE). Lowering interest rates is also seen as necessary even if the economy strengthens to avoid a classic recession.

The Fed's next meeting is on Wednesday, December 13th. There's a 97.7% chance rates will stay the same but over 50% chance of a rate cut by March 2024.

The having event in April 2024 will make Bitcoin more rare than gold due to its fixed supply of 21 million coins. The stock-to-flow ratio for Bitcoin will decrease from 59.3 to 118.7 years after the having event.

A spot Bitcoin ETF may be approved between January 5th and January 10th. This could potentially increase Bitcoin's price long-term.

Historical data suggests that the best performance for Bitcoin occurs in the 12 to 16 months after a halvening event.

There are ongoing debates about Bitcoin's intrinsic value and its comparison to gold. Critics still label Bitcoin as a Ponzi scheme or fraud, whereas supporters view it as an investment opportunity with potential for significant gains.

I was initially skeptical about investing in Bitcoin, but I took the plunge and I'm glad I did. So far, I've seen positive returns.

If you're interested in investing in Bitcoin or any other asset but don't know where to start or how much money you should invest, I recommend dollar-cost averaging with $10 daily from January 1st until now. According to analyst Dylan Leclerc this would result in a 100% return on investment in Bitcoin.

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