Adam Back Urges Investors to Not Undervalue Bitcoin ETF Influence.
$100K BTC? Don’t undervalue Bitcoin ETF influence, says Adam Back

The COVID-19 pandemic, rampant inflation and regional conflicts have had a direct effect on Bitcoin’s (BTC) price decline over the last two years. However, Blockstream CEO Adam Back believes that 2024 will be a year of resurgence for the preeminent cryptocurrency.

The cryptographer, who created the proof-of-work algorithm used in Bitcoin’s protocol, informed Cointelegraph that the crypto is currently trading below the historical price trend line of the previous mining reward halving events.

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“Biblical” events hurt Bitcoin

Crypto big Mike Back has weighed in on the potential price action of Bitcoin as the next halving approaches, which will see Bitcoin miners’ block reward reduced from 6.25 BTC to 3.125 BTC. Block reward halvings are programmatically hardwired into Bitcoin’s code, taking place after every 210,000 blocks.

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 traditional financial markets, including web 3.0 startups, cryptocurrency crypto, and crypto united states.

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, such as crypto good, crypto what to buy, celsius crypto today, crypto inflation, big in crypto, and big for crypto.

“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 the macro events that Back cited have come to an end, while a few industry-specific issues have also been resolved. This has been reflected in the recent surge in Bitcoin’s price from Nov. 2023 onwards.

“The wave of contagion, the companies that went bankrupt because of their exposure to Three Arrows Capital, Celsius, BlockFi and FTX — that’s mostly done. We don’t think there are many more major surprises in store,” Back said.

The Blockstream CEO had earlier predicted that Bitcoin would reach $100,000 in the next market cycle and referred back to this point. He believes that BTC would have already achieved this mark if not for the macro factors mentioned before.

Back also referred to the Bitcoin “stock-to-flow” model created by the former institutional investor PlanB as a reference point for the potential upside for Bitcoin in 2024.

Back explains that PlanB’s model and heuristics indicate that savvy Bitcoin investors usually buy BTC six months prior to a halving event and sell into the significant surges in price that have occurred in the 18 months following the reduction in mining rewards:

He adds that Bitcoin’s price hitting $44,000 multiple times in Dec. 2023 suggests that his previous prediction might not be so far-fetched.

The Bitcoin ETF effect

Industry leaders and market analysts have also discussed the potential consequences of the approval of multiple Bitcoin exchange-traded funds (ETFs) by the United States Securities and Exchange Commission (SEC).

Senior ETF experts Eric Balchunas and James Seyffart have predicted that these applications will be approved in early 2024. Michael Novogratz, co-founder of GalaxyDigital, has also suggested that the adoption of BTC-backed products will lead to a surge of institutional investments, an opinion shared by Back:

Back noted that many traditional market players, such as BlackRock and Fidelity, are not allowed to invest directly in assets like Bitcoin. “If they manage a mutual fund, they have to follow certain rules, either imposed by external forces or as part of their fund, which only permit them to purchase public stocks and ETFs. They cannot invest in web 3.0 startups, buy physical precious metals, or do anything of that sort,” Back said.

This is a major reason why the approval of a Bitcoin ETF could draw in substantial capital inflows. Back further explains that this investment vehicle will facilitate access to Bitcoin exposure for many types of funds, particularly in the U.S., that would rather do so through Fidelity or BlackRock than a cryptocurrency exchange.

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