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The Bitcoin frenzy continues to heat up.
After two consecutive days of slight fluctuations, on February 18th, Bitcoin once again surpassed $52,000 per coin, with a daily increase of nearly 2%. On February 19th, the price of Bitcoin continued to hover above $52,000 per coin. As of the time of writing, Bitcoin was trading at $52,323 per coin.
In fact, since January 24th, the price of Bitcoin has been soaring. According to data from the global coin price website CoinGecko, on January 24th, the price of Bitcoin was still below $40,000 per coin. It then rapidly rose over several trading days, reaching $52,660 per coin on February 15th, setting a new high since December 2021. Compared to the interim low of around $26,750 per coin in mid-October 2023, this represents an increase of nearly 100%.
In addition to spot Bitcoin, newly issued Bitcoin ETFs in 2024 have also been hot, attracting a fierce influx of funds. Some industry insiders believe that the strong recovery in the Bitcoin market is due to factors such as the issuance of the first batch of spot ETFs and the increasing expectations of a Fed rate cut. However, the future performance is still difficult to predict. The Bitcoin market is highly volatile, and there are significant differences in regulatory policies on digital assets among different countries and regions, so entering the market blindly is not advisable.
Continuous Influx of Funds
Industry insiders believe that this round of Bitcoin market started with the issuance of ETFs.
On January 11, 2024, the U.S. Securities and Exchange Commission formally approved 11 Bitcoin spot ETF applications, including institutions such as BlackRock. Prior to this, investors in the cryptocurrency market were mainly individual investors, and the entry of these asset management giants signaled that the "regular army" is accelerating its entry into the market, bringing more incremental funds.
In fact, after the "regular army" entered the market, Bitcoin ETFs continued to be hot, attracting continuous inflows of funds. According to data from BitMEX Research, in just the past week (February 12th to February 16th), the net inflow of funds into the above-mentioned 11 Bitcoin ETFs exceeded $2.27 billion.
Among them, the Bitcoin spot ETF (IBIT) under BlackRock's banner led the inflows. Data disclosed by Bloomberg ETF analyst Eric Balchunas shows that the total inflow of funds into the Bitcoin spot ETF (IBIT) under BlackRock since 2024 has reached $5.2 billion, while the total inflow of funds into 417 ETFs under BlackRock is approximately $10.4 billion. This means that the inflow of funds into IBIT accounts for about 50% of the total inflow of funds into 417 ETFs under BlackRock so far this year.
Regarding the source of the massive funds, industry insiders have different opinions. "It is speculated that some market investors choose to sell gold ETFs and buy Bitcoin ETFs." A domestic cryptocurrency observer told reporters that while Bitcoin ETFs are attracting a large amount of funds, the redemption scale of gold ETFs continues to expand, indicating a certain degree of market rebalancing.
Bloomberg senior analyst Balchunas previously wrote that the incremental funds of Bitcoin ETFs may come from the Grayscale Bitcoin Trust (GBTC). GBTC was originally one of the largest Bitcoin trust products in the market, with assets under management exceeding $40 billion at one point. However, since its conversion into a Bitcoin spot ETF for listing, it has led to a large amount of selling. Between February 12th and 16th, GBTC saw outflows of over $600 million.
The return of risk capital is also seen as a potential positive factor. Data from the U.S. data analysis company PitchBook shows that in the fourth quarter of 2023, the total amount of venture capital investment in crypto-related companies was $1.9 billion, an increase of 2.5% from the previous quarter. This marks the first increase in venture capital investment in crypto startups since the third quarter of 2022.
It is worth noting that after ETFs swept the market, they also continuously "transfused" into the Bitcoin market. Data from CryptoQuant shows that during the period from January 11th to February 15th, approximately $9.5 billion in new funds entered the Bitcoin market through these ETFs. Data from HODL15Capital monitoring shows that nine new spot Bitcoin ETFs purchased 273,500 Bitcoins, worth $14 billion, within 26 trading days. With market funds flowing into the ETFs, the price of Bitcoin has risen accordingly.
Various signs indicate that the Bitcoin market is entering a period of recovery. In addition, the abovementioned industry insiders told reporters that in addition to the bullish news brought by ETFs, Bitcoin will experience its four-year "halving" in April. During this phase, the amount of Bitcoin mined by "miners" on computers will decrease, which is generally considered a signal for price increase.
"The halving rule objectively limits the growth rate of Bitcoin supply and has an anti-inflation effect, which helps promote the appreciation of the currency price." Zhang Liangwei's team at Dongwu Securities pointed out in a research report that since 2009, Bitcoin has undergone three halvings, and each time after the halving, the price of the currency has experienced significant increases. It is expected that the fourth halving will occur in April 2024.
Future Trends
What will be the future trend of Bitcoin, and whether it will reach a new high again? The current market views are divided.
Some analysts are not optimistic about Bitcoin's continued rise in price. Cryptocurrency analyst Marcel Pechman wrote in an analysis that data shows that investors expect earnings growth of S&P 500 index companies to reach 10.9%, higher than the 3.8% in 2023. Assuming that the risks posed by current inflation are equivalent to those when Bitcoin reached its historical high, investors are unlikely to seek alternative assets. For Bitcoin to reach a historical high of $70,000 from its current level of $52,000, it would need to rise an additional 34.5%, meaning that the market value of Bitcoin would increase by $350 billion.
Marcel Pechman believes that as long as the US dollar continues to depreciate, Bitcoin still has the potential to rise above $70,000, but this is unlikely to happen before the block reward "halving" in April.
However, there are also institutions betting on Bitcoin to continue to rise.
"It has sparked enormous interest in traditional finance, which has exceeded my expectations." Matt Hougan, Chief Investment Officer of Bitwise Asset Management, said that with factors such as the supply shortage caused by the halving, the trading price |
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Post time 26-2-2024 07:42:00