Bitcoin’s price recently hit $35,000, its highest level in over a year. This surge isn’t believed to be driven by retail investors but rather by institutional players like BlackRock, seeding their Exchange-Traded Funds in anticipation of a spot bitcoin ETF approval. BlackRock’s June application for a bitcoin spot ETF has set Wall Street on high alert, raising expectations that the SEC will soon approve such an offering.
Charles Yu, a market analyst with Galaxy Digital, predicts that the U.S. wealth management industry, worth $48.3 trillion, could soon access bitcoin. Yu estimates that a bitcoin spot ETF could propel bitcoin’s price by almost 75% within a year, attracting over $14 billion of inflows.
The Halving Effect and Liquidity Cycles
April 2024 is projected to be a significant month for bitcoin due to its scheduled ‘halving’—a pre-coded 50% reduction in the mining reward, which limits the new supply of bitcoin entering the market. Historically, these events have been followed by bullish cycles lasting 12 to 18 months. The timing of this halving coincides with liquidity cycles and U.S. presidential elections, which occur every four years. The convergence of these events could create a potent mix that propels bitcoin into a significant bull run.
Regulatory Tailwinds
Despite the looming specter of regulation, the mood is optimistic. Earlier this month, a former BlackRock managing director predicted the SEC would approve a bitcoin spot ETF in just a few months. Such a move would open the floodgates for funds managing trillions of dollars worth of assets. With bitcoin’s hard capped supply, the limited number available on exchanges and the demand on the horizon, we could be looking at a significant supply crunch. There is not currently enough bitcoin available for institutions to allocate even 1% of their assets under management.
In addition to these regulatory tailwinds, a federal appeals court also recently ruled in favor of Grayscale Investments, further fueling optimism for spot Bitcoin ETFs.
Bitcoin’s Price Outlook
The question on every investor’s mind is: Are we at the beginning of a new bull market for bitcoin? The timing and alignment of institutional interest, a scheduled halving, and potential regulatory approvals could signal just that.
Denny Galindo, the author of the Morgan Stanley Wealth Management report, pointed out that a 50% increase in Bitcoin’s price typically indicates the market has bottomed out. With bitcoin almost doubling its value through 2023, it seems likely that the cryptocurrency is poised for another upswing.
In conclusion, the multi-trillion-dollar influx that a spot Bitcoin ETF could unleash stands as a testament to Bitcoin’s growing maturity and acceptance by mainstream financial entities. If all these factors align, we could witness a supply crunch due to the incoming financial tsunami that could lift Bitcoin to new all-time highs in 2024.
the multi-trillion-dollar influx that a spot bitcoin ETF could unleash stands as a testament to bitcoin’s growing maturity and acceptance by mainstream financial entities. If all these factors align perfectly, we could see a supply crunch triggered by this financial tsunami flooding into the asset class. This could propel Bitcoin to new all-time highs in 2024. However, it’s crucial to remember that such price hikes don’t follow a smooth, upward trajectory; expect some volatility along the way.
