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With the approval of the first spot Bitcoin ETF in the United States, the price of Bitcoin is showing a record rise.
It started the year at $42,000, but rose to $73,500 on March 14, just two months after the spot ETF was approved.
Due to the weak yen, it has also exceeded the 10 million yen mark in Japanese yen. The fact that it has surpassed the highest dollar value of $69,000 recorded during the 2021 bubble has been engraved in the history of cryptocurrencies as an extremely important page.
Spot Bitcoin ETFs are doing well, with daily inflows exceeding $1 billion on March 12. This is a record speed even in the history of ETFs, and there is a possibility that it will continue to increase at an accelerating rate.
The driving force behind Bitcoin ETFs is BlackRock, a major asset management company. The amount of inflows into the spot Bitcoin ETF "iShares Bitcoin Trust (IBIT)" offered by the company is increasing day by day, and the amount of Bitcoin held has finally exceeded 200,000 BTC.
This is a larger amount than MicroStrategy, the US company that holds the largest amount of Bitcoin as a single company. At the moment, the largest amount of Bitcoin is held by "Grayscale Bitcoin Trust (GBTC)" offered by Grayscale, but this ETF is being sold off due to its high management fees compared to others.
Therefore, it is only a matter of time before BlackRock surpasses Grayscale and becomes the ETF that holds the most Bitcoin.
As for the trends of institutional investors, the key to the future will be the interest rate cut trend by the US Federal Reserve (FRB).
Initially, it was widely believed that interest rates would be lowered as early as March 2024, but the most recent February Consumer Price Index (CPI) exceeded market expectations, showing that inflation remains strong.
Given this situation, there is no clear outlook for when interest rates will begin to be lowered.
Jamie Dimon, CEO of JPMorgan Chase, a major U.S. financial institution, points out that "we should wait until at least June of this year."
Depending on the situation, interest rates may be further delayed, and some analysts believe that it will be after the U.S. presidential election in November.
If interest rates are delayed, investors are likely to close their positions, which could cause AI-related stocks, which are currently supporting stock prices, to collapse.
Bitcoin is sometimes linked to these high-tech stocks, so it may be a good idea to keep a close eye on the stock prices of NVIDIA, Google, and other companies.
In addition, one of the biggest events for Bitcoin in 2024 is the halving. The halving of Bitcoin, which occurs approximately once every four years, is an event that increases the scarcity of Bitcoin and affects its price because the amount of new issuance due to mining is halved and the supply to the market decreases.
Looking back at the past, Bitcoin's price has increased significantly compared to the first half of the halving every time a halving occurs. The rate of price increase itself seen at each halving has been calming down year by year as the market capitalization has increased.
Nevertheless, since it has recorded an increase rate of hundreds to thousands of dollars in dollar terms so far, it will undoubtedly be an event that will continue to be important in terms of price in the future.
This will be the fourth halving, and at this point it is highly likely that it will exceed the previous one.
There is a clear tendency for the price of Bitcoin to increase significantly in the year following the halving.
Many people must remember that Bitcoin soared to $69,000 in 2021, its highest price ever at that time. The third halving occurred in 2020, and it fits this trend perfectly.
On the other hand, there are also cases where prices fluctuate a little before and after the halving. As mentioned above, the halving reduces the amount of new Bitcoin issued through mining by half.
This means that the reward for miners who mine will be halved. Therefore, when including necessary expenses such as machine costs and electricity costs, there is a risk that miners will not be able to make a profit in the short term.
In fact, with each halving, the hash rate of Bitcoin increases, making mining more difficult.
Some miners may find themselves in a situation where they cannot mine efficiently with their current machines, and may be forced to prepare new machines.
In light of this situation, there is a tendency for the trend to increase in advance when the price of Bitcoin rises to a certain extent, or to sell after the halving to replenish funds when it becomes unprofitable.
Therefore, it would be wise to be especially careful of price fluctuations around mid-April, when the halving is currently expected to occur.
The most influential factor in Bitcoin's recent price movements is the existence of spot Bitcoin ETFs.
If demand from investors continues to grow, further price increases are possible. On the other hand, the situation could change depending on the trends of institutional investors who trade other financial products.
In particular, since Bitcoin's price has risen sharply, it is likely that the time will come when profit-taking will intensify.
Recently, there was a sell-off after the implementation of Ethereum's major upgrade "Denkun," and it is possible that a similar movement will occur in Bitcoin after the halving.
Alternatively, it is possible that a correction phase will occur at an early stage, taking into account the trends around the halving.
In addition, the interest rate cut movement mentioned above is expected to have a major impact in the future, and it is necessary to carefully watch the movement of Bitcoin after the information is exhausted.
Noriaki Yagi Editor-in-Chief
It is best to take a long-term view and accept that unexpected things will happen.
The Bitcoin spot ETF was approved on January 11th, Japan time. Around the time of the approval, the market was at the mercy of false reports from the hacking of the official X (formerly Twitter) account of the SEC (US Securities and Exchange Commission), but in the end, the price rose until early March with almost no pullback.
Bitcoin saw a much larger inflow of funds than expected due to the impact of the spot ETF, but it only started to pullback after hitting a new all-time high.
Bitcoin, which will soon be halving, is most likely to pullback at this time, but considering the fact that funds have flowed into Bitcoin at an unexpected speed since the spot ETF was approved and the price has risen, it is possible that the price will continue to rise despite the halving.
Shogo Kurobe Duputy editor
With minor developments and interest rate cuts coming into play, will the overheating be resolved this spring?
2024 will be the fourth halving of Bitcoin, but I personally expect that the price will enter a period of adjustment after this.
This is clear from past history, as Bitcoin tends to move weakly after the halving due to selling pressure from miners.
Therefore, I personally believe that the price will not significantly exceed the high of $73,500 recorded on March 14 until autumn, when people will start to be strongly aware of the US presidential election, and that the sense of overheating will be resolved this spring.
This view is being further fueled by the expected delay in the start of interest rate cuts by the Federal Reserve.
In the stock market, there is strong optimism about the Fed's interest rate cut, which I believe is pushing up stock prices, but if this turns negative, there is a high possibility that selling pressure will come to Bitcoin along with tech stocks.
In any case, there have been no notable events after the halving, so the situation will likely remain wait-and-see for a while.
Three factors that will affect prices in the future
1. Since the spot Bitcoin ETF was approved, the amount of funds flowing into it has been increasing day by day. It is expected that it will continue to attract a certain amount of demand, but caution is needed if selling occurs at the same time.
2. Bitcoin's halving is attracting attention as it will have a significant impact on the price in the medium to long term, but caution is needed regarding miners' selling to replenish funds and the actions of institutional investors.
3. If there is any negative movement regarding the timing of the Fed's interest rate cuts, prices may fluctuate significantly, just like tech stocks, so it is necessary to keep a close eye on trends.
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