In October, an episode of Natalie Brunell’s Coin Stories PodcastCoin Stories Podcast featured ARK Invest CEO Cathie Wood stating that the Bitcoin price will reach $1.48 million by 2030. In contrast, on the night of Sunday, December 10th, nearly a week’s worth of Bitcoin gains disappeared in roughly twenty minutes. It dropped from above $43,300 to a low point of $40,659. Bybit reported a peak of $42,180 on the morning of the thirteenth, which occurred before another slight drop. For the moment, Bitcoin looks particularly vulnerable, but hopes are still high for long-term gains.
During these moments, it’s helpful to remember how long-term trends are forecasted. In the Coin Stories Podcast, Wood pointed to the trends that span all kinds of investments. She highlighted how investments in new “asset classes” evolve upwards over time, using real estate, private equity, and venture capital as examples. Bitcoin has not yet reached the 5%-6% investment range that other asset classes have, so it should naturally trend up over the years.
Wood also pointed out that Bitcoin can serve as the type of hedge against inflation that financial institutions like to keep in their books. When cash itself is a depreciating asset, it’s smart bookkeeping to move some of that into an appreciating asset. This is long-term thinking. Fluctuations between $43k and $40k won’t be as important as the internal math of Bitcoin’s year-over-year market value versus other prospective hedges. As global economies swing toward hyperinflation, Bitcoin will make a great medium for remittances.
The timing of Bitcoin’s recent volatility might serve as evidence for its ability to meet these needs and continue to appreciate in the long term. The growth Bitcoin had been experiencing and its precipitous fall aligned with other trustworthy investment assets. Bitcoin investors had been enjoying the same Santa Claus Rally that stock investors anticipate every year, and other top cryptocurrencies had also been pulled into it to some degree. The dip aligns with the stock market as well. Stock volatility is anticipated at this time of year, as inflation data is made available and the Federal Reserve sets monetary policy.
It could be argued that Bitcoin’s abrupt fall is evidence of Wood’s point. If Bitcoin is evolving to serve as an asset class equal to venture capital and stocks and will serve as a hedge against inflation, then it makes sense that its value would vary alongside the stock market and news about inflation trends. Those interested in these possibilities will want to keep a close eye on how the stock market responds to any policy statements from the Federal Reserve and see if Bitcoin mirrors this response.
Overall, Bitcoin has seen significant gains throughout 2023. The current long-term trend is that investors are holding fast to their Bitcoin, which is keeping supply low and helping to drive its value. In her interview, Wood discussed Bitcoin’s future in theoretical bear or bull markets. In both cases, Bitcoin has a lot of potential growth ahead. Wood didn’t foresee any scenario in which Bitcoin didn’t experience significant growth. This unwavering confidence from experts underscores the growing belief in Bitcoin’s resilience and capacity to redefine the financial landscape.
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