By: Evan LaMontagne | Sarson Funds Analyst
There are some large impending catalysts in the Bitcoin arena, notably the Bitcoin halving in April 2024 and the anticipated approval of a Bitcoin spot Exchange-Traded Fund (ETF) by the end of January 2024. These two events stand as crucial milestones with far-reaching implications for the cryptocurrency market. This discourse delves into the synergistic significance of these events, underpinned by the recent robust performance of Bitcoin, which has seen a 150% increase in value over the past year, and a notable surge in investor confidence following the collapse of FTX in November 2022. This rejuvenated investor sentiment has formed a vital backdrop to the potential transformative events on the horizon.
Bitcoin’s Resilience
Bitcoin’s recovery and growth since the fall of FTX is a testament to its resilience and the evolving confidence of investors in the cryptocurrency market. The surge of 150% in its value over the year not only reflects its recovering strength but also sets a positive precedent for the upcoming developments. The Bitcoin halving, a pivotal event scheduled for April 2024, is particularly noteworthy. This event, which halves the reward for mining new blocks on the Bitcoin blockchain, effectively reduces the rate at which new Bitcoin are generated, thereby impacting the supply side of the market. Historically, such halvings have led to a bullish sentiment and a subsequent rise in Bitcoin’s price, attributed to the increased scarcity of newly minted Bitcoin. The upcoming halving will reduce the block reward from 6.25 Bitcoin to 3.125 Bitcoin every block, or roughly every 10 minutes, a change that is likely to have a significant impact on the market.
Imminent Spot Bitcoin ETFs
Simultaneously, the cryptocurrency community is keenly anticipating the potential approval of a Bitcoin spot ETF in the United States, with the approval window for the Grayscale (Blackrock) ETF slated for January 5th-10th, 2024. The most realistic dates for this decision are considered to be January 8th, 9th, or 10th as they are Monday, Tuesday and Wednesday that week respectively. The repeated discussions between the Securities and Exchange Commission (SEC) and Grayscale to refine their application, coupled with positive expectations from industry experts, including an ex-SEC chair and other experts, suggest that the approval of such ETFs is imminent. The introduction of a Bitcoin ETF would represent a significant milestone, providing a more accessible and regulated avenue for investors to gain exposure to Bitcoin through traditional means. This could potentially broaden the investor base, attracting both institutional and retail investors en mass.
Catalysts Collide
The convergence of the Bitcoin halving and the imminent ETF approvals are poised to create a synergistic effect on the market. The halving is expected to exert upward pressure on Bitcoin’s price by reducing new supply, while the ETF approval could simultaneously amplify demand by providing a streamlined investment channel that millions already trust. This dual effect could lead to heightened interest from both institutional and retail sectors, propelling Bitcoin’s price and its adoption in the mainstream financial world. Moreover, the approval of a Bitcoin ETF would also be a significant regulatory milestone, symbolizing a level of government and regulatory acceptance. This, in turn, could boost investor confidence in Bitcoin and the broader cryptocurrency market, attracting long-term investors looking for a reliable store of value.
The Reshaping of Decentralized Markets
In conclusion, the upcoming Bitcoin halving and the potential approval of a Bitcoin spot ETF are pivotal events that could significantly reshape the landscape of the Bitcoin market. These developments, coupled with the recent surge in Bitcoin’s value and the improved investor confidence post-FTX collapse, are likely to have a profound impact on Bitcoin’s price dynamics, investor interest, and the overall market environment. While the cryptocurrency market is characterized by its volatility, these forthcoming events may herald a new era consisting of stability and sustained growth for Bitcoin, marking it as a turning point in its history and introducing a new global asset to millions.
Disclosures: Not investment advice. The Author, Sarson Funds, Inc. and its affiliated managers may hold positions in the projects mentioned. Talk with your financial advisor before making any investment decisions or have them contact Sarson Funds directly at [email protected].
