Whether the exchange rate between Bitcoin and the Canadian dollar can break through the 100,000 Canadian dollar mark of 1 BTC in the short term is the focus of many investors’ attention. Looking back at history, Bitcoin reached its historical peak in November 2021, with 1 BTC equivalent to approximately 89,000 Canadian dollars (based on the price of around 69,000 US dollars and the exchange rate of 1.29 US dollars to Canadian dollars at that time). Although Bitcoin has an average annualized return rate of over 200% in past cycles, the bear market in 2022 caused its value to plumper by more than 75%. The current price of 1 BTC to CAD is approximately 60,000 Canadian dollars (calculated based on the exchange rate of 60,000 US dollars for Bitcoin to 0.73 Canadian dollars), and there is still a 66.7% increase space from the 100,000 Canadian dollar target. This means that Bitcoin needs to achieve a significant price leap within a limited time, and the challenge is self-evident.
The Bitcoin halving event and institutional adoption are potential driving factors. The block reward halving, which occurs every four years (the next one is expected to be in April 2024), has historically led to supply shortages. Historically, there have often been significant price increases within 12 to 18 months after the halving. For instance, after the halving in May 2020, the price of Bitcoin soared by more than 600% within 18 months. Meanwhile, institutional demand has picked up. After the approval of the US spot Bitcoin ETF in early 2024, the net inflow of funds exceeded 12 billion US dollars in the first three months. The asset scale managed by products such as Grayscale GBTC reached tens of billions of US dollars, indicating that traditional capital is gradually flowing into the crypto field. However, it remains questionable whether these factors alone can support a short-term increase of 66.7%.
Regulatory policies pose significant uncertainty to the exchange rate of 1 Bitcoin against the Canadian dollar. Global regulatory frameworks vary greatly. Take Canada as an example. As early as February 2021, the Canadian Securities Authority (CSA) regarded cryptocurrencies such as Bitcoin as securities and brought them under regulation, requiring trading platforms to register in compliance and raising margin requirements to hundreds of millions of Canadian dollars. Binance’s withdrawal from the Canadian market in 2023 due to regulatory pressure is a real example. Conversely, if major economies such as the United States approve spot Bitcoin ETFs (which currently have a managed scale exceeding 55 billion US dollars) or if the full implementation of the EU’s MiCA regulations brings a clearer compliance path, it may enhance market confidence. The FTX collapse in November 2022 caused the entire cryptocurrency market to lose over 200 billion US dollars in market value in a single month, demonstrating the huge impact of negative regulatory events.
The macroeconomic environment plays a fundamental role. When high inflation (for instance, Canada’s inflation rate once reached as high as 8.1% in 2022) erods the purchasing power of fiat currency, the appeal of Bitcoin as “digital gold” may rise. The benchmark interest rate of the Bank of Canada reached as high as 5.0% in 2023, hitting a 22-year high and pushing up the cost of holding traditional assets. The change in the correlation between Bitcoin and traditional financial markets is also crucial: from 2021 to 2023, its correlation with the Nasdaq Index rose from nearly 0 to above 0.6. Fluctuations in the exchange rate of the US dollar against the Canadian dollar can also be directly transmitted to the price of 1 bitcoin to cad. When the US dollar is strong, the price of Bitcoin denominated in Canadian dollars is usually under pressure. The current core PCE inflation in the United States is approximately 2.8%, and the market is betting that the Federal Reserve will cut interest rates by about 100 to 150 basis points in 2024.
Overall assessment shows that the probability of 1 Bitcoin breaking through 100,000 Canadian dollars in the short term (for example, within the next 3 to 6 months) is relatively low. It may require the combined driving force of a series of highly favorable events. The probability of successfully crossing this threshold may be between 20% and 30%. From a cyclical perspective, historical peaks typically occur approximately 18 months after halving, that is, by the end of 2025, which provides a time window for potential gains. However, the volatility of crypto assets often exceeds 60%, and high returns are accompanied by high risks. Investors need to carefully weigh the potential returns against the risk of significant drawdowns.