Exchange-traded funds (ETFs) have emerged as a hot topic, especially with regard to their potential to push the price of Bitcoin (BTC) past its previous high (ATH) of around $70,000.
BTC supporters are also optimistic that the halving event scheduled for April 2024 will further energize the world’s leading cryptocurrency.
Bitcoin’s Bullish Momentum
Bitcoin (BTC) has hit its highest price since 2021 and has undergone a significant correction after coming close to the $69,000 high it achieved in November 2021. Prices remain comfortably above the $62,000 price area as of press time.
Bitcoin’s strong bullish momentum follows significant inflows into the global cryptocurrency market, driven by the long-awaited approval of the Orange Coin spot exchange-traded fund (ETF) in the United States.
These ETF approvals have attracted billions of dollars in institutional investment, contributing to Bitcoin’s strong upward momentum.
Despite subsequent volatility, Bitcoin’s resilience and growing institutional interest have sparked optimism among investors.
Of the 11 spot Bitcoin ETFs approved by the Securities and Exchange Commission (SEC) led by Gary Gensler in January, 10 are actively trading and are attracting significant inflows.
According to K33 Data Research, the nine newly approved spot Bitcoin exchange-traded funds (ETFs) in the U.S. currently collectively manage more than 300,000 Bitcoin (BTC), valued at over $17 billion at the time of data collection. . This figure represents a new high for the fund as it represents approximately 1.5% of the total 19.6 million BTC currently in circulation.
According to the latest data on the GBTC website, Grayscale holds approximately 445,386.8454 BTC worth approximately $27.61 billion at press time. Considering the combined holdings of the recently approved spot Bitcoin ETF and Grayscale Assets, the total value of the cryptocurrencies held by these companies is approximately $43 billion.
Notably, the mentioned totals do not include the holdings of Grayscale, which has converted its long-standing Bitcoin Trust (GBTC) into a spot Bitcoin ETF with SEC approval. You may also like:
Bitcoin ETF Drives Investor Demand
While the debate continues about ETFs’ impact on the price of Bitcoin, other factors have also played a role in the asset’s solid performance thus far.
As investors seek to purchase shares of ETFs that reflect the underlying prices of the assets, various fund managers are quickly acquiring virtual currencies in response to customer demand.
Among the newest Bitcoin ETF operators is BlackRock, the world’s largest fund manager, with over $7 billion in assets under management.
According to FactSet, trading volume for iShares Bitcoin Trust (IBIT) surged on February 28, with approximately 96 million shares traded, more than double the previous record of approximately 43 million shares set on February 27.
These ETF products have been incredibly successful, with investors who previously could not access Bitcoin in a safe and regulated manner now turning to the sector.
Conversely, skeptics warn that the introduction of Bitcoin ETFs could exacerbate volatility and speculative trading, leading to unpredictable market dynamics. They cite concerns about market manipulation, lack of oversight and the potential for investor losses as reasons to proceed with caution.
Bitcoin Halving: Catalyst for Price Spike
The Bitcoin halving event, which occurs approximately every four years, has had a significant impact on Bitcoin’s price trajectory and market dynamics over the years. During each BTC halving event, the reward for mining a new block is halved, effectively reducing the flow of new coins into the market and impacting supply.
Historically, Bitcoin halvings have signaled significant price increases. After the 2012 halving, the price of Bitcoin soared 80 times, and after the 2016 halving, it rose 300%. In particular, the price of Bitcoin has surged more than 600% in the 16 months since the 2020 halving.
Many analysts and experts are optimistic about the possibility of the upcoming halving pushing Bitcoin price to new all-time highs. Forecasts show it will skyrocket to at least $130,000 by the end of 2024.
Not everyone agrees.
For example, JP Morgan expects the price of Bitcoin to fall to $42,000 after the halving.
For those who don’t know, the halving event serves to maintain Bitcoin’s scarcity and prevent excessive price inflation. By reducing the mining reward from 6.25 Bitcoin per block to 3.125 BTC, this halving further emphasizes Bitcoin’s scarcity and is consistent with the deflationary principle.
This scarcity-based model underpins Bitcoin’s controlled supply mechanism, ensuring that only 21 million BTC are in circulation.
As of this writing, Bitcoin is trading at $62,413 and has a market capitalization of over $1.2 trillion. It remains to be seen whether analysts’ optimistic predictions of significant ATH for the world’s leading cryptocurrency will come true in 2024.