On the Margin Newsletter: Why $100k for BTC in 2024 is no pipe dream

Welcome to the On the Margin Newsletter, brought to you by Ben Strack, Casey Wagner and Felix Jauvin. Here’s what you’ll find in today’s edition:

• Macro factors suggest the stage could be set for BTC to hit $100,000 in 2024 — though such a rise is far from guaranteed.
• Tomorrow’s jobs report is going to be a big one. Could this be the soft landing everyone’s been waiting for?
• The FTX debtor-creditor saga continues, in case you haven’t had enough.

BTC to $100k, or no way?

Bitcoin’s price is inching closer to the nice round number of $100,000. Despite an apparently set stage, there remains a lot to play out.

Some forecast BTC to hit the six-figure mark by the end of year, with Galaxy Digital CEO Mike Novogratz being the latest to share that possibility this week.

Breaking the $73,000 resistance level — which hasn’t been done since March — and reaching a new high would be a start.

Bitcoin price ebbs and flows are not as random as they might appear on a CoinGecko page. As crypto matures as an asset class, we have an increasingly good sense of the macro factors to watch for.

BTC rose above $71,000 after US spot bitcoin ETFs saw near-record net inflows of $887 million on Tuesday. Those funds welcomed $488 million more to their coffers the day after, and BTC remained in the $71,000 range midday Thursday.

The ETFs’ standing as a main entry point into the space for retail investors and institutions alike means they will no doubt continue to impact underlying BTC price action.

These products become more appealing in the face of excessive government spending, noted Matthew Kaye, head of operations and strategy at Ethereum-based attestation protocol Intuition Systems.

Pair that with an expected eventual interest rate drop from what many deem to be their peak, and BTC surpassing $100,000 this year seems likely, he told Blockworks. The European Central Bank (ECB) lowered rates by 25 basis points Thursday, and the Federal Reserve’s FOMC meeting is set for next week.

“The question that I am asking myself is, how much time will pass between $100,000 and $250,000?” Kaye said. “And the answer to that is likely correlated to how bad the government balance sheet gets.”

BTC’s increasing link with TradFi — helped by the ETF launches — means the impact of macro events on BTC’s price will continue to increase, said D8X co-founder Caspar Sauter.

This cycle is different from others given TradFi’s legitimizing of the segment, he noted. Not to mention how politicians (particularly the Dems) have started to embrace crypto.

“Unlike what we saw last year with heavy regulatory crackdowns and delays in legislation, policymakers are pushing for crypto to have regulatory clarity,” Sauter explained.

Bitwise Chief Investment Officer Matt Hougan called President Biden’s veto of Joint Resolution 109 “a minor setback” — adding that the crypto market would be at new all-time highs “if people understood the ramifications of the shift in DC.”

I didn’t even mention April’s Bitcoin halving and the historical price uptrend seen in the 12 months or more after those events.

Still, a 40% or so BTC price rise over the next seven months is by no means guaranteed, even if the factors making it possible are in front of us.

Suppose, for example, inflation gets worse after the ECB rate cut?

K33 analysts also point to sell-side pressure stemming from Mt. Gox redistributions as a potential catalyst for a BTC price dip later this year.

Bitcoin may be a volatile asset, but every day we get more inputs into the factors ticking the price up or down. It’s still good to beware, though, of a rabid black swan attacking your boat.

— Ben Strack

$340 million

The rough combined value of the two crypto M&A deals revealed today.

Robinhood said it planned to acquire Bitstamp for about $200 million in cash. The investing app has pushed deeper into crypto in recent years, growing its crypto-related transaction revenue to $126 million in the first quarter.

Buying the longest-running crypto exchange shows how strongly Robinhood feels about the segment and the presence it wants to establish within it, particularly in Europe.

Also on Thursday, bitcoin miner Bitdeer made public its deal to buy ASIC chip designer Desiweminer in an all-stock transaction valued at $140 million. That buy comes after Tether last week invested $100 million in Bitdeer.

Happy Jobs Day Eve!

May’s jobs report from the Bureau of Labor Statistics drops at 8:30 am ET tomorrow, and it’s going to be a big one.

Economists are calling for nonfarm payrolls to gain 180,000, a slight increase from April’s 175,000 rise, according to FactSet. They expect the unemployment rate to hold steady at 3.9%.

Bank of America analysts predict nonfarm payrolls to come in a bit higher, expecting a 200,000 increase. The general consensus seems to be that the labor market is still on solid ground, but it’s also cooling off.

Could this be the soft landing everyone’s been waiting for?

The Fed is slated to reveal its interest rate decision next Wednesday at 2 pm. Fed fund futures this afternoon showed a 99.9% probability that rates will stay right where they are, but expectations of the first rate cut coming in September are growing, according to data from CME Group.

If tomorrow’s report comes in too hot (the economy adds way more jobs than expected, think 220,000+), an autumn rate cut could be out of the question. A too cold report (only around 75,000 jobs are added) means the long-term health of the economy is going to be questionable.

We’ll also get the Fed’s official projections next week. Key figures to note will be the central bank’s target interest rate for December and their predicted inflation figures.

— Casey Wagner

FTX creditors are at it again

The class action complaint former FTX customers filed against the bankrupt exchange’s estate has resumed after taking a brief hiatus while SBF stood trial.

Sam, who was sentenced to 25 years in March, is busy working on his appeal from the Metropolitan Detention Center in Brooklyn.

Meanwhile, Sullivan & Cromwell is hard at work trying to square away FTX’s bankruptcy plans — and fighting off disgruntled creditors.

Class action plaintiffs on Wednesday filed an objection to FTX’s proposed plan, arguing once again that repaying exchange customers based on the value of their accounts at the time of the collapse is an unfair solution.

FTX last month filed its Disclosure Statement, which included its plan for how to settle creditor claims. Per the plan, most former FTX customers who lost fiat and/or crypto assets on the exchange will get between 118% and 143% of their value, as of Nov. 11, 2022.

The problem, of course, is that most FTX customers had assets on the exchange that have appreciated significantly in the last 18 months. Bitcoin, for example, was around $17,000 on 11/11/22. Today, it’s just under $71,000.

Former FTX customers have been complaining about Sullivan & Cromwell’s solution for months. One even brought it up to judge Lewis Kaplan during SBF’s sentencing. (Given it’s a completely separate case in a different court, Kaplan couldn’t have cared less.)

We will have to wait and see what the bankruptcy judge has to say, but if you’re a creditor expecting to get all your coins back, maybe don’t hold your breath.

— Casey Wagner

Bulletin Board

• The On the Margin newsletter officially hits inboxes Tuesday, June 11. Subscribe and get more news at the intersection of crypto, macroeconomics, policy and finance.
• Shares of bitcoin miner Core Scientific soared earlier this week after it inked a deal with CoreWeave to host the cloud provider’s high-performance computing (HPC) services. But Core Scientific said Thursday it would not accept CoreWeave’s bid to buy the company, noting it “significantly undervalues” the miner.
• We knew SEC chair Gary Gensler was a fan of romantic comedies, but a Swiftie? That threw us for a loop. The SEC is apparently celebrating its 90th anniversary with an “Eras Tour” of its own. Hopefully this doesn’t mean we will see Gary donning a custom sequin Versace bodysuit anytime soon.

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