Bitcoin: More Room for Upside in 2024?

Desmond Foo

Bitcoin has significantly outperformed all asset classes in 2023, despite a series of negative news clouding the cryptocurrency space over the last 12 months. After rallying more than 160% in 2023, we believe there is more upside in 2024 and investors should consider adding bitcoin exposure to their portfolio allocation.

Firstly, demand-supply dynamics are expected to provide continued tailwinds. Most of bitcoin’s 60% gain in Q4 so far has been attributed to speculation a spot bitcoin ETF will be approved by the US SEC in January next year. Such ETFs will appeal to both retail and institutional investors alike, providing them a cheaper and more convenient way to gain exposure to digital assets on a regulated stock exchange.

In addition, the next Bitcoin halving event is expected to take place in April 2024. Halving events cut in half the amount of tokens Bitcoin miners receive as a reward, limiting the rate of creation of new bitcoins and slowing supply growth. In the past 3 halving events since Bitcoin’s launch in 2009, significant rallies ensued, followed by new all-time highs each time.

The correlation between bitcoin and global equities recently fell to its most negative (-0.2) since the start of the pandemic, after reaching a high of 0.8 in 2022. A maximum correlation of 1 indicates a perfect linear relationship between two asset classes. A correlation value closer to zero makes Bitcoin more appealing in terms of asset allocation, helping with portfolio diversification and risk management. Lastly, from a regulatory standpoint, we have recently witnessed stricter oversight and increased anti-money laundering regulations within the crypto space. This is viewed positively over the longer term as it helps build confidence and legitimacy in the sector after various recent scandals. In conclusion, we believe a modest exposure to bitcoin is warranted in one’s overall asset allocation. It enhances portfolio diversification, and positions investors to reap the upside benefits of growth drivers over the longer term.


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This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor.

Cryptocurrency is a digital representation of value that functions as a medium of exchange, a unit of account, or a store of value, but it does not have legal tender status. Cryptocurrencies are sometimes exchanged for U.S. dollars or other currencies around the world, but they are not generally backed or supported by any government or central bank. Their value is completely derived by market forces of supply and demand, and they are more volatile than traditional currencies. Cryptocurrencies are not covered by either FDIC or SIPC insurance. Legislative and regulatory changes or actions at the state, federal, or international level may adversely affect the use, transfer, exchange, and value of cryptocurrency.

Purchasing cryptocurrencies comes with a number of risks, including volatile market price swings or flash crashes, market manipulation, and cybersecurity risks. In addition, cryptocurrency markets and exchanges are not regulated with the same controls or customer protections available in equity, option, futures, or foreign exchange investing.

Neither Asset Allocation nor Diversification guarantee a profit or protect against a loss in a declining market.  They are methods used to help manage investment risk.

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The MSCI ACWI Indexis a free float‐adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets.  The MSCI ACWI consists of 46 country indexes comprising 23 developed and 23 emerging market country indexes.

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