BlockBay Capital portfolio update November 2023

BlockBay Capital portfolio update November 2023

The BlockWealth portfolios achieved a positive return of between the +5% and +17% in November.

Bitcoin has achieved a return of +124% this year (until November 30). The cryptocurrency is well on its way to putting the losses of the past two years behind it. November was also a good month for Bitcoin with a return of +9% in US dollars. Other cryptocurrencies also recovered significantly, partly as a result of improved sentiment on the financial markets.

It currently appears that the historical (four-year) cycle will repeat itself again, with the rise of Bitcoin price starting about six months before the halving and peaking approximately six to eighteen months after the halving. In this case, it would mean that Bitcoin’s price would peak between the end of 2024 and the end of 2025 and that exponential growth is yet to come.

The conditions for a new bull run are favorable due to the following expectations and developments in the short term.

  • Inflation and interest rates are expected to fall, which is favorable for risky investments
  • The upcoming bitcoin halving
  • There is a very high chance that the Bitcoin ETF will be approved by early 2024 at the latest. This could also happen in the last weeks of 2023

The shorter-term risks are that the economy will end up in a recession, inflation will prove persistent, interest rates will be high and, finally, the most important one: an unexpected rejection of the Bitcoin ETF.

In addition to these short-term developments, it is interesting to look at the fundamental prospects for Bitcoin. Bitcoin is gaining legitimacy with both institutions and central banks. The ECB itself recently indicated in a report that Bitcoin could be interesting as a savings tool for residents of countries with extremely high inflation and/or a weak currency. Bitcoin is therefore increasingly active in the playing field of the macro economy and is also increasingly accepted as an alternative to physical gold. Physical gold is used by central banks to diversify reserves and as a stable factor in times of financial turmoil. The further institutionalization of Bitcoin will ensure that it becomes easier for companies in particular (and perhaps in the future also governments) to diversify into Bitcoin. Due to the increasing scarcity of Bitcoin, a relatively small allocation will have a major impact on the price.

The upcoming Bitcoin ETF is slowly generating a lot of enthusiasm among investors. A Bitcoin ETF is yet another step in the development and legitimacy of Bitcoin investors. Crypto trading now mainly takes place on crypto exchanges, some of which have a questionable reputation. As soon as there is sufficient confidence for institutional investors and the availability of the right investment funds, an inflow of capital will follow. The halving will cause a so-called ‘supply shock’ in which the daily number of new Bitcoin put into circulation will halve from 900 Bitcoin to 450 Bitcoin. At Bitcoin’s current price, that’s only $20 million per day. There is also less and less Bitcoin available on crypto exchanges and there are an increasing number of investors who are continuously buying more for the longer term.

Looking ahead, there are a number of developments to get excited about, these developments are also slowly being picked up by the market. Prices therefore rose further in the first week of December. Further fireworks can also be expected in the remaining period of the year due to upcoming news regarding the Bitcoin ETF.