Economic Instability Could Pave the Way for Bitcoin's Ascent to $200K

High spending and interest rate policies are expected to boost the demand for assets like Bitcoin that serve as a store of value.

In 2024, the cryptocurrency landscape has seen many developments already. Now analysts believe Bitcoin's price could rise to potentially $200K due to new ETFs and its role as a store of value in tough economic conditions. In mining, Marathon Digital announced that it plans to increase its hash rate target for 2024 to 50 EH/s. Moreover, the auction of a rare "epic sat" from the latest Bitcoin halving fetched a record $2.13 million.

Bitcoin's Path to $200K

Throughout 2024, Bitcoin has experienced many price surges, which were mostly driven by the launch of several spot exchange-traded funds (ETFs) and its recognition as a fundamental store of value. As the United States continues to discuss high spending and interest rate policies, Grayscale’s research director, Zach Pandl, anticipates a more sustained interest in Bitcoin because of persistent inflation and budget deficits. These factors are expected to boost the demand for assets like Bitcoin that serve as a store of value.

The challenge in predicting Bitcoin's future value lies in the uncountable variables at play. However, Jupiter Zheng, a partner at HashKey Capital’s liquid fund, sees a lot of growth potential in the crypto king, and predicts that Bitcoin could reach between $100,000 and $200,000 by the end of 2024.

Venture capitalist Tim Draper is also bullish on Bitcoin, suggesting that the crypto could triple in value within the year to reach $250,000. He also believes this will mostly be due to inflows into ETFs and the Bitcoin halving. According to Draper, the introduction of spot Bitcoin ETFs in the U.S. has rejuvenated interest and capital investment in Bitcoin as it offers a hedge against devaluing fiat currencies and it is less daunting for new investors interested in Bitcoin but wary of holding it in self-custody.

Despite the positive outlook, the introduction of ETFs could also lead to increased volatility in Bitcoin’s price, as they allow for easier investment shifts compared to traditional self-custody of assets. Zheng points out that while the baseline model price stands at $90,000, the projections could range from $50,000 in a bearish scenario to $125,000 in a more bullish outlook. Some of the factors that could influence these predictions include net inflows into spot BTC ETFs, potential Federal Reserve interest cuts, and the Bitcoin halving, which could further skew the demand-supply balance.

Overall, it seems like the consensus among experts points to a likely upward trajectory for Bitcoin's price throughout the year.

SEC Considers Rule Change for Bitcoin Options Trading

Meanwhile, the United States Securities and Exchange Commission (SEC) is currently conducting a new round of consultations about a proposed rule change that would allow trading options on Bitcoin exchange-traded products (ETPs). An official filing from Apr. 24 reveals that the SEC wants to understand the potential impacts of listing Bitcoin options on market dynamics, especially in volatile or stressful conditions.

The review process will include an examination of whether existing surveillance and enforcement mechanisms are good enough to manage the distinct challenges associated with Bitcoin options. Interested parties are invited to submit their initial comments by May 15, 2024, with a deadline for rebuttal comments set for May 29, 2024.

Feedback from a previous consultation phase was included in the current filing, with many commenters arguing that the introduction of options on Bitcoin ETPs would boost market liquidity and efficiency. It is also suggested that the approval of these trading options could integrate Bitcoin more deeply into the regulatory framework, attracting more participation from regulated entities like CFTC-regulated merchants and SEC-regulated broker-dealers.

Several leading financial institutions, including Nasdaq and Cboe, have already submitted applications to the SEC to trade Bitcoin options. Nasdaq is specifically looking to list options on the iShares Bitcoin Trust managed by BlackRock, whereas Cboe plans to provide options trading on various Bitcoin ETPs. Asset managers like Bitwise and Grayscale are also looking for regulatory approval to offer options on their Bitcoin ETFs through the New York Stock Exchange.

What are Bitcoin Options?

Bitcoin options are financial derivatives that provide the right, but not the obligation, to buy or sell Bitcoin at a predetermined price on a specific future date. As the cryptocurrency market evolved over the years, options trading expanded beyond traditional assets to include digital currencies like Bitcoin and Ethereum, although these markets are available on only a few traditional securities exchanges and crypto trading platforms.

Cryptocurrency options operate similarly to those for stocks, indexes, or commodities, but they tend to be less liquid due to the relatively smaller size of the crypto markets. This lack of liquidity can affect market dynamics, like price slippage, particularly for options with longer durations.

Trading Bitcoin options carries some risk, often greater than in spot trading. For example, if Bitcoin does not reach the strike price by the option's expiration, the trader will lose the entire premium paid for the call option. Additionally, options trading involves complexities like time decay, which reduces the option's value as the expiration date approaches.

Despite their potential, Bitcoin options markets are still in their nascent stages, especially when compared to more established financial instruments.

Marathon Digital Targets 50 EH/s

In the Bitcoin mining space, Marathon Digital has raised its hash rate target for 2024, aiming to increase from 35-37 exahashes per second (EH/s) to 50 EH/s. This ambitious goal follows the firm's recent expansions, including the acquisition of a 200-megawatt mining center from Digital Applied for $87.3 million in March, and two additional sites from Generate Capital totaling 390 megawatts for $179 million in December of last year.

CEO Fred Thiel is very confident that the company can hit this target without the need for more capital fundraising considering the additional capacity provided by these acquisitions. Thiel wants to double Marathon’s mining operations by leveraging the current momentum in the crypto mining sector.

As of now, Marathon has a hash rate of 24.7 EH/s, placing it ahead of its competitors, Core Scientific and Riot Platforms, which have hash rates of 16.9 EH/s and 12.4 EH/s respectively. Achieving the new target would more than double Marathon's current output.

Despite a slight drop in Marathon’s stock price by 0.42% to $19.01 on Apr. 25, the stock rallied by 4.5% in after-hours trading after the announcement. The firm has also seen a general stock increase of over 15% since the fourth Bitcoin halving event on Apr. 20.

The initial surge in demand after the halving was driven largely by enthusiasts of memecoins and nonfungible tokens using the Runes protocol to inscribe "rare satoshis."

Rare Satoshi Sells for $2.13 Million

Interestingly, a single satoshi, called an "epic sat", fetched a whopping 33.3 Bitcoin (approximately $2.13 million) at an auction held on CoinEx Global. This particular satoshi was part of the fourth Bitcoin halving block, mined by viaBTC on Apr. 20, and sold just five days later. The auction began on Apr. 22 and attracted 34 bids.

This "epic sat" is one of only four such sats in existence, each one minted during the respective Bitcoin halving events that have taken place to date. These sats are unique because they are the first mined in each new halving block and are assigned specific sequence numbers under the Ordinals number system, which catalogs them based on mining timestamps.

The value of an ordinary satoshi is generally around $0.00065, given that a Bitcoin comprises one hundred million sats. However, certain sats gain a lot of value due to their unique identifiers and historical significance in the Bitcoin network. This creates a collectible element, greatly elevating their market worth.

In addition to the epic sat, viaBTC also received a reward for mining the halving block, totaling 3.125 Bitcoin as the block subsidy and an additional 37.6 Bitcoin in transaction fees. The next Bitcoin halving is scheduled for 2028 at block 1,050,000, which will reduce mining rewards to 1.5625 Bitcoin.