Why Bitcoin And Crypto Should Prepare For A “Rollercoaster” Ride

Sharing a post on X on January 12, the co-founder cited a confluence of macroeconomic factors that will likely drive the crypto market forward. This outlook, it should be noted, comes days after the Securities and Exchange Commission (SEC) approved 11 spot Bitcoin exchange-traded funds (ETFs). The historic decision legitimizes Bitcoin and allows institutions managing trillions in assets to invest in BTC through a regulated channel.

Spencer notes that the upcoming Bitcoin halving event is at the top of the list. Set by the network, the event is expected to occur in early April 2024. It will mark the beginning of the fifth epoch, where miners will receive 3.125 BTC, down from the current 6.25 BTC. This event will gradually reduce Bitcoin’s emissions, which might support prices in the medium to long term.

BTC halving progression chart | Source: Bitbo

Beyond halving and the expected BTC supply shock, the co-founder believes that the SEC will most likely approve a spot at Ethereum ETF. The agency has already approved several Ethereum Futures ETFs.

With this laid out and stringent measures placed to prevent manipulation, the co-founder said a spot Ethereum ETF, applied by, among others, BlackRock and Fidelity, might be authorized in the coming months. Spot Bitcoin and Ethereum ETFs would drive crypto institutional adoption, a net positive for prices.

The co-founder also said there will be a revival in decentralized finance (DeFi) following the battering in 2022. When Ethereum and Bitcoin prices crashed, the total value locked (TVL) across DeFi fell to below $40 billion, according to DeFiLlama data.

TVL has recovered and stands above $50 billion as crypto prices recover. According to Spencer, at least two DeFi projects will generate over $1 billion in revenue within the next 24 months.

DeFi TVL | Source: DeFiLlama

FED May Slash Rates, But When Will BTC Stop Falling?

Spencer further believes political and macro factors will buoy crypto. For instance, the co-founder mentioned the prospect of the Federal Reserve (FED) changing its monetary policy and aggressively slashing rates from the current 5.5% to around 2-3%. On the political side of the equation, the venture capitalist thinks there are “over 70% odds of a new pro-crypto administration in 2025.”

Bitcoin price trending downward on the daily chart| Source: BTCUSDT on Binance, TradingView

For now, Bitcoin remains under pressure but volatile. To illustrate, the coin is down roughly 10% from around the $48,700 it reached this week. Whether the coin will find support at around January 8 lows of around $43,000, marking the start of the “rollercoaster” ride, remains to be seen.