As Bitcoin (BTC 1.38%) stays stuck around the $30,000 range, true believers and the patience of the "HODL" (crypto lingo for "hold") crowd is being stretched thin. Alas, the road to broad adoption is longer than the perma-bulls had promised, and macroeconomic factors may have slowed the process.
Still, I'll stand by my longtime practice of buying exciting assets when they're boring. If Bitcoin's not in the headlines during this long, hot summer, that's all the more reason to take a position in anticipation of upcoming catalysts.
Fed dread distracts jittery HODLers
Speaking of upcoming catalysts, the next Bitcoin halving event -- in which the rate at which miners will produce Bitcoin is reduced, thereby constraining new supply of the cryptocurrency -- is set to take place in less than a year. Past Bitcoin halving events have typically preceded price run-ups, but there doesn't seem to be much enthusiasm surrounding the anticipated 2024 event (at least, judging from social media activity and a review of recent financial press headlines).
To some extent, the muted sentiment can be attributed to jitters over expected interest rate increases in 2023's second half. Bitcoin is certainly a risk-on asset, and with some traders bracing for potentially a couple more quarter-point hikes in the federal funds rate, the ensuing slowdown in economic activity could weigh heavily on Bitcoin's price.
Somehow, financial market behemoth BlackRock (BLK 0.69%), the world's biggest asset manager, doesn't seem overly concerned about Bitcoin's future prospects despite potential macroeconomic headwinds. Calling Bitcoin an "international asset," BlackRock Chief Executive Officer Larry Fink gave it a hearty endorsement, saying that Bitcoin is "not based on any one currency so it can represent an asset that people can play as an alternative." Clearly, as BlackRock has filed with the Securities and Exchange Commission to get a spot (as opposed to futures-based) Bitcoin exchange-traded fund (ETF) approved, there must be investor interest. The only real obstacle at this point is regulator pushback.
Could miner hoarding be a major catalyst?
Along with BlackRock's backing, Bitcoin's HODLers can derive encouragement from an intriguing thesis courtesy of Standard Chartered. Evidently, that firm is preparing for Bitcoin to reach $50,000 this year and even $120,000 in 2024 due to anticipated miner hoarding, of all things.
Much like the halving, Bitcoin mining profitability dynamics could (if Standard Chartered's argument holds true) reduce Bitcoin's supply and thereby put upward pressure on its price. It's a virtuous cycle, if you can follow the logic: "Increased miner profitability per BTC (bitcoin) mined means they can sell less while maintaining cash inflows, reducing net BTC supply and pushing BTC prices higher."
Presumably, the "increased miner profitability per BTC" would require Bitcoin not to crash in the short term. Moreover, the cause-and-effect relationship depends on miners choosing not to cash out their newfound gains; just because they can sell less for more money doesn't necessarily mean they will sell less.
In other words, I'd assess Standard Chartered's hypothesis as fascinating but far from assured. Ultimately, neither the approaching halving nor expected miner behavior can guarantee a Bitcoin supply crunch. But if either of those events comes to pass and boosts Bitcoin during the next year, surely the HODLers won't complain.
More likely, increasing adoption and a seemingly inevitable if delayed bona fide Bitcoin ETF will prompt the next leg up. So, to answer the titular question: Yes, you should invest in Bitcoin now, especially if you have faith that logic will eventually prevail and a Bitcoin ETF will be not only permitted, but commonplace.
