The Penalyst Special Edition - 2024 Outlook

As 2024 gets underway, it’s that time of the year for Pennings CIO, Timothy Hellberg to share his market projections based on the current information at hand, and what he thinks will be the way forward. In Q1 of 2023, I made the projection for Bitcoin to end the year between 46k to 50k. And as all of you know, Bitcoin came just short of 45k in December of 2023. So the projection was a bit too aggressive, but still very close. Let me take you through my current reasoning for 2024.

2024 presents a rather unique situation. With the BTC halving coming up, in combination with US elections and a shift in Central Bank policy, I do believe we have a better possibility to project the price development of BTC in 2024 than usual.In this special edition of The Penalyst, I will take you through what I believe to be the most influential market happenings we have in store, and lastly, a detailed outline of what I’m expecting the price to look like.

With that said, it is important to point out that this analysis is based on current information at hand, and there will most likely come different events over the next 12 months that could not be foreseen and move markets in whatever direction. But as traders and investors, we need a baseline to work out of and shift our biases accordingly when the market changes.

THE BTC HALVING & ETFs#

It is no secret by now that BTC tends to rally into halving events as miners continue to stockpile Bitcoins into the event. This year is no different than any other halving year, and with the potential looming approval of ETFs, we are creating a little bit of a “perfect storm” with Bitcoin circulating supply going down whilst the demand increases.

With that said, I do however expect the issuers of these ETFs to have this well in mind, and that is highly market-positive, as I think issuers of such as Black Rock are willing to pay a premium now, for long-term exposure.

So whilst I do not expect either of these events to be the big driver of Bitcoin price for the whole of 2024, it does set off for an interesting Q1 and especially Q2.

On the note of the ETFs, I think it’s important to mention that I do believe markets are not quite pricing in the risk of approval being delayed once again in January, causing a 15-25% correction in BTC prices. Although I don’t see this as the high odds outcome, I do believe it has a higher chance than what the market thinks.

However, I don’t see this as a problem. ETFs will be approved in this round or the next, so by now it is just a matter of when not if. In addition to that, I am expecting at least ONE larger correction in BTC prices during 2024, and I’m expecting this to either trigger in mid-January due to the ETFs not being approved, or sometime end Q1, much in relation to the markets shifting focus to Central Bank policy. More on that later in the report.

US ELECTIONS#

It’s election year in the US, and by the looks of it, we will most likely have a Trump vs Biden re-run. Think what you want about US politics, but I do think there is an overhanging chance of Trump taking it, giving a republican government. This in combination with the SEC being forced to stand down more and more on digital assets, as well as US-tied exchange Coinbase most likely grabbing more and more market shares after the Binance debacle and ETFs using Coinbase, I’m expecting to see a new US government, Republican or Democrat, with a more friendly stance on crypto.

Additionally, with my bet being on Trump taking home the win, we might even see a rather dramatic shift in US politics trying to “welcome crypto back” to the US.

It is also important to point out the importance of economic policies, and once again I think here that a Republican president will be more beneficial in terms of access to liquidity in the general finance space, which in turn would also benefit the digital asset market.

As we enter the run-up of the campaigns, presidential candidates will scramble for votes and we can expect additional comments on digital assets in relation to this, that can swing prices in either direction. However as mentioned above, I think either political side will be beneficial for the price of BTC in the long run, albeit one more than the other.

A new, or re-elected president tends to want to kick off his new term with some market-boosting actions, showing the voters they made the right decision and how good they are going to live under these new policies.

CENTRAL BANK POLICY#

I believe this will be the largest driver of BTC prices throughout 2024. ETFs and the halving are stealing all the limelight at the beginning of the year, but I do believe the market will move on from this faster than what people think, and it will be right back at looking into inflation and central banks cutting rates.

I am expecting inflation to cool at a steady pace, and the US FED moving along with rate cuts in an appropriate pace. This will free up liquidity in the financial markets, some of which will find its way into digital assets too, providing the need for BTC to expand in value. With the approval of ETFs, there will be an ongoing demand big enough for this liquidity too, which will translate into higher prices.

Several of mine, and external, inflation models are all pointing in the same direction, and this makes it much easier than usual to predict central bank policy, which we then in combination with the other above-mentioned points can translate into an actual roadmap for BTC prices in 2024.

On a last note, if we do get approved ETFs in January, I am expecting a correction in BTC prices to begin sometime mid to end February and trickle into the end of March before moving higher again.This is because the inflation models suggest mixed figures during Q1, which most likely take the spotlight rather quickly after the ETFs and cause some anxiety in digital asset markets. This anxiety will hit the parts of the market that are the most overleveraged, and I expect an ongoing unwinding of such positions into the end of Q1 bringing prices down 10-20%.

THE ROADMAP#

This is simply a projection based on a collection of underlying models. It’s in no way 100% accurate and swing form for error margins needs to be accounted for.

What it is, however, is a basis, a sort of roadmap that we use as the basis for the investment work at Penning Capital Management. We don’t take the values at the specific valuations; we use them more as a guide for what volatility we can expect in combination with a directional bias on a monthly basis.

2024 might turn out completely different from this, but heading into the year, this is our roadmap.

Key dates and levels we are watching:

- Mid-January ≈ +18%

- End Q1 correction (≈ minus 10-20%)

- End Q2 ≈ +30-40%- End August ≈ +87%

- Mid-November ≈ +98%

- Year-end just below +200%

On a final note, once again, this is not a recommendation or prediction. It’s a projection, and projections change. This model will change over the year as we enter new economic data into it. It is provided for educational purposes, not as a basis for investment advice or similar.

*Disclaimer: This article is not financial or investment advice, nor should it be perceived as such. Penning Group and the author (Timothy Hellberg) shall not be held accountable for any misinterpreted information by the reader. If you are interested in learning more about investing in the DeFi space, please get in touch with us.