Bitcoin Price Could Hit $118K by Year-End: Reasons Revealed

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In a recent analysis posted on X, Kelly Greer, Vice President of Trading at Galaxy Digital, makes a strong case for why Bitcoin’s price could soar to as high as $118,000 by year-end. Greer’s insights are based on a mix of historical performance data, current market trends, and broader macroeconomic conditions, all suggesting a very favorable environment for Bitcoin.

Reasons Why Bitcoin Might Soar to $118,000

Greer emphasizes Bitcoin’s impressive historical performance during the fourth quarter (Q4) in prior years, indicating that since 2020, Bitcoin’s average Q4 return from its intra-quarter peak has been around 85%. This statistic encompasses a best-case return of an impressive 230% and a worst-case decline of just 12%.

“BTC average Q4 return (to max [intra-quarter high watermark, full q return]) since 2020 is +85% (worst -12%, best +230%)—you’d be hard-pressed to find a stronger asymmetry,” Greer writes. This statistical asymmetry points to a notable upside potential relative to the downside, marking Q4 as historically a period of substantial growth for Bitcoin.

An average Q4 with an 85% price increase could position Bitcoin to end the year at $118,000. Should BTC surpass its record high return of 230%, the price might even climb beyond $200,000.

Importantly, Greer argues that the market is currently not fully prepared to seize this opportunity. She cites several primary factors contributing to this underallocation. Firstly, there is uncertainty regarding the upcoming U.S. presidential election on November 5. Secondly, significant focus and capital are being funneled into other assets like gold and China’s A-shares, potentially pulling investment away from Bitcoin.

“I still believe the market isn’t allocated appropriately—2024 is an unusual scenario where some segments of the market are underindexing on the Q4 asymmetry due to a) the Nov 5 U.S. election risk and/or b) the allure of other assets (gold, China A-shares, etc.),” Greer comments.

Key Factors Favoring Bitcoin

To back up her observations about the market’s current alignment, Greer discusses her conversations with risk managers and notes specific market indicators. She pointed out that “low volatility and contained perp funding” imply that traders are not wagering heavily on major price fluctuations.

In addition to these market trends, Greer identifies several macroeconomic and industry-specific developments that could create a “generally very positive” backdrop for Bitcoin. A key factor is the ongoing global stimulus measures in major economies such as the U.S. and China, with the notable exception of Japan.

Greer also mentions that BNY Mellon, the largest custodian bank globally, has received a SAB 121 exemption, which allows the bank to provide custody services for Bitcoin without the strict capital requirements that previously made these services less appealing. Greer describes this change as “massive and underappreciated,” underscoring that it will significantly “loosen financing in our industry.”

Moreover, Greer points out that ETF flows have become “very constructive.” In recent days, spot BTC inflows have surged significantly. Just last Friday, net flows reached $494.8 million, marking the highest net inflow day for the quarter and the highest since June 4th.

Another positive sign is that Bitcoin miners are forming agreements with hyperscalers—large cloud service providers—which can boost mining efficiency and cut operational costs.

Greer also notes that “supply overhangs [are] mostly done,” indicating that significant sell-offs that could depress the price are unlikely in the short term. Furthermore, she anticipates “demand from FTX cash distributions [is] on the horizon,” suggesting that funds from the FTX exchange could soon flow into Bitcoin investments, further driving up demand.

However, Greer is also cognizant of potential risks that could influence Bitcoin’s path. These include signals from the Federal Reserve regarding monetary policy and the chance of a pullback in equity markets, which could introduce volatility or dampen investor enthusiasm.

Regardless, she remains optimistic about the overall sentiment. “There are risks, of course—Fed signaling, equities pullback, what have you—but overall vibes are quite positive, and flows are just beginning,” she notes.

Greer characterizes Bitcoin as a “reflexive asset,” explaining, “BTC is the ultimate reflexive asset: price -> flows -> price.” This reflects how rising Bitcoin prices draw in more investment, which then drives prices even higher—a self-reinforcing loop.

With Bitcoin approaching Q4 after breaking a crucial price level at $65,000, Greer expects that reclaiming the $70,000 mark would trigger an acceleration of inflows, as investors react to the positive trend and remember the strong Q4 performances of prior years.

As of the latest update, BTC was trading at $63,947.