In recent days, Bitcoin (BTC) has performed as strongly as it did in 2021, with the No. 1 crypto sometimes rising another 5 percent within 24 hours. Over the course of the week, Bitcoin has risen about 15 percent. By comparison, this is roughly equivalent to the annual performance of the DAX in 2023. But when market euphoria knows no bounds, a correction is often just around the corner. Will we soon see the big collapse?

Why is Bitcoin rising?

Fundamentally, the price rise is driven by two factors: First, hopes for institutional capital in the wake of the expected approval of a Bitcoin Spot ETF. The responsible exchange regulator, the SEC, may not let the January 10, 2024 deadline pass. A decision must be made at that time. Most market observers assume that approval will be granted - if rumors are to be believed.

Moreover, the macroeconomic story is in good shape. Inflation is falling, institutional money is increasingly turning away from interest-bearing government bonds and focusing on risky assets such as tech stocks and Bitcoin. As a result, banks such as Morgan Stanley expect significant interest rate cuts over the next 24 months. This is positive for limited real assets such as Bitcoin.

And bitcoin correlates with various liquidity indicators more closely than any other asset I track. pic.twitter.com/WanyER15oN
— Lyn Alden (@LynAldenContact) December 4, 2023

What can we expect?

There are even indications that the current bull run has even more powder in it. For example, at 1.5 on the MVRV indicator, Bitcoin is still giving a fairly sober valuation. As a reminder, MVRV stands for the ratio of market value to realized value and indicates phases of undercooling or overheating.

Only when the MVRV indicator shows an overheat between the values of 7 and 9 should we watch out. Such significant corrections are to be expected in a bull run. Traders should also be prepared for declines of up to 20 percent in such moments. With such hefty price movements, it is not unwise to take your profits from time to time. However, it is not possible to make a reliable prediction as to when these values will arrive.

Bitcoin: well-equipped for the long term

Fundamentally, Bitcoin is likely to perform well in everyone's portfolio over the next 24 months. In addition to the aforementioned positive macroeconomic outlook, the halving of BTC is just around the corner. Combined with the unprecedented interest from institutional investors, there is indeed a "cross-generational investment opportunity."

Or, in the words of institutional crypto investment manager Hashdex: "We are currently in a cryptolent and preparing for a hot summer in 2024."