$100,000 BTC? Don’t undervalue Bitcoin ETF influence, says Adam Back
The COVID-19 pandemic, rampant inflation and regional conflicts directly influenced Bitcoin’s (BTC) drop in value over the past two years. However, 2024 promises to be a resurgent period, according to Blockstream CEO Adam Back.
The cryptographer, who pioneered the proof-of-work algorithm applied in Bitcoin’s protocol, tells Cointelegraph that the preeminent cryptocurrency is trailing below the historical price trend line of previous mining reward-halving events.
“Biblical” events hurt Bitcoin
Back weighed in on the potential price action of Bitcoin as the next halving, which will see Bitcoin miners’ block reward reduced by 6.25 BTC to 3.125 BTC, looms in April 2024. Block rewards halvings are programmatically hardwired into Bitcoin’s code, taking place after every 210,000 blocks are mined.
Back says that the overlaid averages of the previous market cycles and halvings indicate that Bitcoin’s relative value is trailing behind widely accepted projections. Multiple events have played a role in driving the price of BTC down, which has also been seen across conventional financial markets:
“The last few years were like biblical pestilence and plague. There was COVID-19, quantitative easing, and wars affecting power prices. Inflation running up people, companies are going bankrupt.”
The impact has keenly affected markets and portfolio management according to Back. Investment managers have had to manage risk and losses over the past few years which has necessitated the sale of more liquid assets.
“They have to come up with cash and sometimes they’ll sell the good stuff because it’s liquid and Bitcoin is super liquid. It used to happen with gold and I think that’s a factor for Bitcoin in the last couple of years,” Back explains.
Bitcoin would have hit $100,000 already
As 2023 comes to a close, many of these macro events that Back cited have wound down while more industry-specific failures have also been resolved. This has been reflected in Bitcoin’s recent price surge from Nov. 2023 onwards.
“The wave of the contagion, the companies that went bankrupt because they were exposed to Three Arrows Capital, Celsius, BlockFi and FTX – that’s mostly done. We don’t think there are many more big surprises in store,” Back said.
Related: Blockstream targets continued Bitcoin miner surplus with Series 2 BASIC Note
The Blockstream CEO predicted that Bitcoin would hit $100,000 in the following market cycle earlier this year and referred back to this point. He believes BTC would have hit this mark already if not for the factors highlighted in conversation with Cointelegraph.
Back also referred to the Bitcoin “stock-to-flow” model created by pseudonymous former institutional investor PlanB as a reference point for the potential upside for Bitcoin in 2024.
If you want to know more about bitcoin Stock-to-Flow:
* This is the original 2019 article:https://t.co/n5P5uMCKHT
* Or watch this YouTube video:https://t.co/3SGMU1Ln00 pic.twitter.com/Qp8SjqtXIB— PlanB (@100trillionUSD) December 5, 2023
Back explains that PlanB’s model and heuristics suggest that savvy Bitcoin investors historically bought BTC six months before a halving event and sold into significant surges in price that have occurred in the 18 months following the drop in mining rewards:
“People thought it was a bit of a crazy assertion that we might get to $100,000 pre-halving because I said it when the price was around $20,000.”
He adds that Bitcoin’s price hitting $44,000 multiple times in Dec. 2023 suggests that his prior prediction might not be so far-fetched.
The Bitcoin ETF effect
Prominent investors and market analysts have also highlighted the effect of the potential approval of several spot Bitcoin exchange-traded fund (ETFs) applications by the United States Securities and Exchange Commission (SEC).
People asking me if we changed odds. No, we still holding line at 90% odds of approval by Jan 10 (aka this cycle), the same odds we’ve had for months (before it was cool/safe). What we watching for now: more amended/final filings to roll in and clarity on in-kind vs cash creates https://t.co/uiWgfxOfzz
— Eric Balchunas (@EricBalchunas) November 29, 2023
Senior ETF analysts Eric Balchunas and James Seyffart have touted these applications to get the green light in early 2024. Galaxy Digital’s co-founder Michael Novogratz has also predicted mass inflows of institutional investment into the BTC-back products, a point which Back echoes:
“I think Bitcoin could get to $100,000 even before the ETF and before the halving. But I certainly think the ETF shouldn’t be undervalued in its influence.”
A key reason cited by the Bitcoin advocate is that whole segments of traditional markets, including major fund managers like BlackRock and Fidelity, are simply not allowed to invest directly into assets like Bitcoin.
Related: Bitcoin ETFs will drive institutional adoption in 2024 — Galaxy Digital’s Mike Novogratz
“If they’re managing a mutual fund they have rules, either externally imposed or as part of their fund, that they can only buy things like public stocks and ETFs. They can’t buy into startups, they can’t buy precious metals physically. They can’t do any of that stuff,” Back highlights.
This remains a pertinent reason why a spot Bitcoin ETF could drive major capital inflows into the space. Back adds that the investment vehicle opens access to Bitcoin exposure for many types of funds, particularly in the U.S., that are more inclined to do so through Fidelity or BlackRock than with a cryptocurrency exchange.
Magazine: ‘Elegant and ass-backward’: Jameson Lopp’s first impression of Bitcoin
Sir Keir Starmer and Rachel Reeves have hinted at tax rises to come when the chancellor delivers the budget later this month.
In a Downing Street speech this morning, Ms Reeves will address “speculation” that an increase in income tax will be announced during the highly-anticipated statement on 26 November.
Politics Hub: Follow chancellor’s speech live
Sky News political editor Beth Rigby said it was “highly unusual” for the chancellor to make such a speech, but the Treasury believes she must “try to prepare the ground and make the argument for another big tax-raising budget”.
“I will make the choices necessary to deliver strong foundations for our economy – for this year, and years to come,” Ms Reeves will say.
Last night, Sir Keir gave Labour MPs a taste of what’s to come by warning of the need for “tough but fair” decisions.
Speaking at a party meeting in Westminster, he said the budget “takes place against a difficult economic backdrop”.
“It’s becoming clearer the long-term impact of Tory austerity, their botched Brexit deal and the pandemic on Britain’s productivity is worse than even we feared,” the prime minister said.
“Faced with that, we will make the tough but fair decisions to renew our country and build it for the long term.”
It comes after Sir Keir refused to confirm at Prime Minister’s Questions last week that the budget would honour his party’s manifesto pledge not to raise income tax, national insurance or VAT.
Having raised taxes in last year’s budget, notably national insurance on employers, Ms Reeves has also previously promised not to “come back for more” during this parliament.
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Will Labour raise taxes?
The PM and chancellor’s warnings come after reports suggested the Office for Budget Responsibility is expected to downgrade its productivity growth forecast for the UK by about 0.3 percentage points.
That would leave Ms Reeves with a larger than expected fiscal black hole to fill, possibly up to £30bn.
She is said to be considering a proposal from The Resolution Foundation, a left-leaning thinktank close to the government, to raise income tax by 2p but cut national insurance by the same amount.
The thinktank, which used to be headed by Torsten Bell, a Labour MP who is now a key aide to Ms Reeves and a pensions minister, said the move would raise vital cash while protecting working people.
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A promise-breaking budget?
Reeves to prioritise NHS and cost of living
Giving a further flavour of what to expect, Ms Reeves will this morning vow to make “important choices that will shape our economy for years to come”.
“It is important that people understand the circumstances we are facing, the principles guiding my choices – and why I believe they will be the right choices for the country,” she will add.
Ms Reeves will say her priorities are cutting national debt, easing the cost of living and protecting the NHS.
“It will be a budget led by this government’s values,” she’s set to say.
“Of fairness and opportunity and focused squarely on the priorities of the British people: protecting our NHS, reducing our national debt and improving the cost of living.”
Strangulation pornography will be banned following a review which found such images have helped to establish it as a sexual norm.
The possession and publication of images depicting strangulation and suffocation will be criminalised under the Crime and Policing Bill, which is currently making its way through parliament.
Non-fatal strangulation is already an offence in its own right, but it is not currently illegal to show it online.
Conservative peer Baroness Bertin warned earlier this year that there has been a “total absence of government scrutiny” of the pornography industry.
Baroness Gabby Bertin carried out a review of the online pornography industry
Her independent review, published in February, referred to worrying anecdotal evidence from teachers about students asking how to choke girls during sex.
People acting out choking in their sex lives “may face devastating consequences”, she said in the review.
On Monday, the government confirmed it was putting forward amendments to the Crime and Policing Bill, which is due to come back before peers in the House of Lords for further scrutiny next week.
As well as making strangulation or suffocation in pornography illegal, duties will be placed on online platforms to stop the spread of such images, the Ministry of Justice (MoJ) said.
Another amendment will extend the time limit for victims of intimate image abuse, which can include so-called “revenge porn”, to come forward to report such crimes.
Currently, victims have six months to do so, but this will be extended to three years.
Victims minister Alex Davies-Jones said the government “will not stand by while women are violated online and victimised by violent pornography which is allowed to normalise harm”.
She added: “We are sending a strong message that dangerous and sexist behaviour will not be tolerated.”
Of strangulation pornography, Technology Secretary Liz Kendall said: “Viewing and sharing this kind of material online is not only deeply distressing, it is vile and dangerous. Those who post or promote such content are contributing to a culture of violence and abuse that has no place in our society.
“We’re also holding tech companies to account and making sure they stop this content before it can spread. We are determined to make sure women and girls can go online without fear of violence or exploitation.”
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From June: ‘He was going to kill me’
The government said if the amendments were accepted, possession or publication of strangulation or suffocation in pornography would become a priority offence under the Online Safety Act.
Technology firms would be legally required to take steps to stop such violent content reaching internet users, rather than simply waiting for it to be reported.
The government suggested this could be done through moderation tools, stricter content policies or automated systems being used to detect and hide images.
The British Board of Film Classification (BBFC) welcomed the planned changes, but said they must “mark the beginning of broader reform to ensure parity between online and offline content standards”.
Its chief executive David Austin said: “Harmful depictions of non-consensual, violent and abusive activity continue to be readily accessible to UK users.”
The BBFC said it stands ready to take on “the formal role of auditing online pornography”, which would be “a natural extension of the role we have carried out offline for decades”.
Bernie Ryan, chief executive of the Institute For Addressing Strangulation, welcomed the proposed ban, saying the “serious risks posed by unregulated online content, especially to children and young people” must be recognised.
She added: “Strangulation is a serious form of violence, often used in domestic abuse to control, silence or terrify.
“When it’s portrayed in pornography, particularly without context, it can send confusing and harmful messages to young people about what is normal or acceptable in intimate relationships. Our research shows there is no safe way to strangle.”
The advocacy organization filed a brief opposing prosecutors’ arguments that two brothers presented themselves as “honest validators” to allegedly pull off a $25-million exploit.
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