Bitcoin prices have nearly doubled since mid-October, rallying as the world’s most prominent digital currency benefits from multiple tailwinds including the recent spot exchange-traded fund (ETF) approval and anticipation surrounding the upcoming halving.
The cryptocurrency, which is the most valuable in the world in terms of total market value, surpassed $52,800 yesterday, according to CoinMarketCap data.
At this point, the digital asset was trading at its loftiest value since late 2021, up close to 100% after falling to nearly $26,750 roughly halfway through October, additional CoinMarketCap figures reveal.
Several analysts offered input for this article, singling out the major variables they perceived as fueling bitcoin’s sharp gains over the last four months.
Joe DiPasquale, CEO of cryptocurrency hedge fund manager BitBull Capital, shed some light on the digital currency’s bullish factors.
When asked whether the recent approval of spot-based bitcoin ETFs and anticipation surrounding the halving, scheduled for April, were fueling the recent appreciation, DiPasquale offered the following reply:
“You’re exactly correct that the anticipation surrounding the spot, bitcoin, ETFs, and the anticipation around the halving are major drivers,” he wrote via comments submitted through email.
“During the last halving, there was also a large run up on price in the months before. We also saw institutional buyers, from MicroStrategy, to others, onboard both before the ETF announcement, and others are rumored to now be onboarding as well,” said DiPasquale, highlighting the growing role that major financial institutions are playing in the digital currency markets.
David Lawant, head of research at FalconX, also weighed in.
“The main driver for the BTC price increase we saw was the anticipation of the spot ETF approvals in the U.S. in January combined with the impressive amount of capital that these instruments so far have been able to gather,” he stated via emailed comments.
“Over the past few days, the average net inflow to spot BTC ETFs has been around $500 million per day, which is well beyond what the market was expecting,” said Lawant.
“On top of that, the macroeconomic environment has been favorable for broader risk assets,” he added. “Although not the primary factor, I believe macro has also been supporting BTC prices.”
“Case in point, the correlations between BTC and broader risk asset indices such as the S&P 500 and Nasdaq are now at the highest point over the past three months,” the market observer stated.
Tim Enneking, managing partner of Psalion, also weighed in, offering a different perspective on what fueled bitcoin’s recent upside.
“There were a number of drivers: general market turnaround relative to 2022 (in the four-year BTC halving cycle, 2023 should have been – and was – a decent year), no more disasters à la Celsius, FTX, Terra/Luna, etc. (‘no news is good news’), positive judicial developments (the US SEC lost more court cases than it won, and the losses were material and representative), the upcoming BTC halving, and, most obviously and for a couple of months leading up to the decision, BTC spot ETFs,” he wrote via comments sent in through email.
When asked whether anticipation surrounding the approval of spot-based bitcoin ETFs, and then the eventual “green light” they got from authorities, served as the single greatest driver of the cryptocurrency’s gains since October, Enneking replied that it was “not necessarily” the case.
“If you are looking only at late 2023 and early 2024, that is true. But we tend to forget that in August, September and before, a BTC spot ETF still seemed like a pipe dream, yet BTC was still doing reasonably well,” he stated.
“Said another way, BTC would still be doing very well even without the US ETF decision – just not as well as it currently is,” Enneking concluded.
While the runup to prior bitcoin halvings have been credited with fueling substantial upside in the cryptocurrency’s price, the analyst predicted that this latest event, which will once again reduce bitcoin’s rate of new supply by 50%, will have less of an impact than prior halvings.
He stated that the most interesting aspect of all this is “whether the BTC spot ETF run-up will take some (or a lot) of the edge off the normal halving runup.”
“The other issue is that, during the three prior halvings, the BTC price fell back and moved basically sideways for roughly two quarters immediately following the halving,” noted Enneking.
“The real – and enormous – move up took place after that. It did not take place immediately after the halving,” he stated, adding further nuance.
“If that trend holds true, Q4 2024 will be the start of a raging bull market as we saw in 2021, 2017 and 2013,” Enneking predicted.
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and SOL.