Bitcoin BTC -1.89% 's price could surpass $40,000 this year after Binance’s DOJ settlement and former CEO Changpeng Zhao’s guilty plea to financial violations signaled a turning point in the crypto landscape, according to Matrixport analyst Markus Thielen.

Binance's agreement to pay $4.3 billion in fines marks one of the largest corporate settlements in U.S. history. After stepping down as CEO, Zhao will pay a $50 million fine and a $175 million personal recognizance bond. He also faces a possible 18-month prison sentence, with a hearing set for Feb. 23.

The outcome, less severe than a feared $10 billion fine and not accusing Binance of misappropriating user funds or alleging market manipulation, suggests it will likely remain a top-three exchange over the next 2 to 3 years, the analyst argued.

Despite the Binance news initially being perceived as a risk-off event, bitcoin only experienced a temporary correction, Thielen said, bouncing back from the $36,000 level in a "robust counter-trend reaction.” with “bitcoin surging above $40,000 inevitable.”

“We anticipate bitcoin surpassing $38,000 by the end of this month with an 80% probability, followed by a rally above $40,000 in December with 90% probability,” Thielen added.

Bitcoin seasonality

October 2023 saw bitcoin's price soar by 28%, a trend that may continue with the anticipated approval of a bitcoin spot ETF in the U.S., the Matrixport analyst said, something that would further underscore confidence in bitcoin as a legitimate asset class.

Seasonality is another factor, with average December returns of 12% potentially lifting bitcoin to $42,000 by this metric alone, he added.

Tether’s USDT market capitalization increases by $5 billion

Since September, Tether’s USDT market capitalization has increased by $5 billion, signaling a growing trend among institutional investors shifting from fiat into stablecoins, potentially converting them into other cryptocurrencies, such as bitcoin, Thielen said.

“Last night, another $600 million USDT appeared to be minted, potentially signaling inflows into bitcoin after the Binance/CZ deal with U.S. enforcement authorities that seemed to increase the probability that a U.S.-listed spot bitcoin ETF could be approved by January,” Thielen added.

USDT daily minting. Image: Matrixport.

Macro environment supportive of crypto

The macro-environment also continues to support crypto, Thielen said, with Matrixport anticipating another halving of inflation toward 1.6% and a decline in bond yields to 2.60% by 2024 or 2025, following the peak of the U.S. 10-year Treasury yield at 4.95% in this cycle.

The adjustment in bond yields is expected to usher in a surge for the stock market, which often correlates with cryptocurrencies, the analyst added.