Bitcoin — The Bull Run is Launched
Gold and Bitcoin are surging. While one mainly benefits from geopolitical tensions, the other gains from anticipation regarding ETFs and the halving event.
Bitcoin has reclaimed the $40,000 mark for the first time since May 2022. It’s up 142% since the start of the year. And 160% compared to its last low just one year ago.
The “barbarous relic” is also wiggling, finally delivering a new all-time high. Gold has eked out a modest 11% gain since the beginning of the year. That’s a twelvefold lesser performance than Bitcoin…
Both stores of value are rising in tandem, but for different reasons. Bitcoin is energized by the imminent ETF, while gold seems to mostly benefit from geopolitical tensions.
However, let’s emphasize that Bitcoin IS gold, only better. For two main reasons: its scarcity and ease of transaction:
- Bitcoin’s money supply is capped at 21 million units. In contrast, we produce more gold each year than the year before. Next April, due to the halving event, Bitcoin will officially be twice as scarce as gold.
- Bitcoins travel from one end of the world to the other almost for free and instantly. Not to mention that gold cannot be used directly as currency.
Here’s a fun one-minute video for illustration:
Geopolitical tensions are pushing gold up
The end of the truce between Israelis and Palestinians is the major event causing the rise of gold, which remains the ultimate safe haven until the approval of a Bitcoin ETF.
The conflict is indeed likely to disrupt the global supply chain, in turn exacerbating inflation, which remains high in much of the world.
The reason being that Yemen is conducting piracy operations in the Red Sea. Knowing that about 12% of global maritime trade passes through this vital artery for the old continent. Including six million barrels of oil per day (9% of the total transported by sea).
Attacks have multiplied since the high-profile capture of the Israeli cargo ship Galaxy. This weekend, a U.S. warship and three Israeli ships were targeted by several Yemeni drones.
“There were four attacks against three distinct commercial ships operating in the international waters of the southern Red Sea”, states the US Central Command announcement.
Israeli media report that one of the ships attacked by Yemen’s Ansarallah resistance forces “was significantly damaged and is at risk of sinking”.
“Today, we are engaged in a decisive struggle against the United States and the Zionist enemy. We will pursue it until the attacks on Gaza cease,” said the spokesman for the Yemeni armed forces.
Circumnavigating Africa rather than taking the Suez Canal lengthens shipping routes by about a week for merchant vessels. This could lead to further inflation.
Bitcoin ATH expected in 2024
For several weeks, the SEC has been increasing contact with funds aiming to launch bitcoin-backed ETFs.
According to ETF expert James Sayffart, these conversations occur when approval is imminent… “We believe that the likelihood of Ark’s proposed ETF being approved before January 10, 2024, is 90%,” he said already a few weeks ago.
For him, the SEC is likely to approve all ETFs at once between January 5th and 10th. January 5th being the deadline for the decision on Ark Invest’s ETF from Cathie Wood.
Another force at play: the “halving”. In April, the reward given to miners for each block they mine will be halved. Instead of 6.25 BTC, the amount of BTC created every 10 minutes will drop to 3.125 BTC.
Every four years, the Bitcoin protocol halves its monetary issuance. In the past, this has always resulted in a marked appreciation:
Many foresee Bitcoin surpassing $100,000 in 2024. Among them are Blockstream CEO Adam Back, and the Standard Chartered bank.
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Bitcoin, geopolitical, economic and energy journalist.
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.