With Bitcoin going on a price rally for the past months, the question that now springs into everyone’s mind is how far can Bitcoin go? We’ve seen the flagship crypto reach a yearly record shy of $45,000 in December and gain over 160% since the beginning of the year, so there’s hope and optimism floating in the air in the crypto community. If the crypto king can maintain its positive performance, the number of people interested in where and how to buy Bitcoin is bound to increase but most importantly, digital currencies can gain wider acceptance as payment mechanisms and investment venues.
But let’s not get ahead of ourselves with these predictions and take things one step at a time. In 2023, Bitcoin has managed to climb back from the depths of the most recent crypto winter and partially mend the losses it experienced in 2022. It was a rather slow and cumbersome process, but the jump from $16,000 registered in January to $42,941, Bitcoin’s current trading price, is nothing short of impressive.
This sustained price appreciation journey offers hope that further growth might lie ahead for Bitcoin. With the end of the year approaching, analysts are weighing in on Bitcoin’s trajectory and sharing their predictions for 2024. Many believe that the crypto leader could rocket past its all-time high of $ 68,789 and reach a six-figure digit, above the $100K threshold. They cite two notable events that can serve as catalysts in this respect: the halving and the potential approval of a spot Bitcoin ETF.
All eyes on the spot Bitcoin ETF craze
One of the most defining developments for the crypto industry in 2023 with the potential to influence market movements in 2024 is represented by the slew of spot Bitcoin ETF applications.
The idea of establishing a spot Bitcoin exchange-traded fund has been vehiculated for years, but we’ve never been so close to a possible approval as we are now. Several asset management firms have filed applications for spot Bitcoin ETFs over the years with the U.S. Securities and Exchange Commission and every single one of these applications was rejected due to concerns related to fraud and market manipulation risks.
The SEC has only given the seal of approval for Bitcoin futures ETFs. These funds offer exposure to Bitcoin’s future price movements without actually owning the asset by using contracts that allow investors to purchase or sell Bitcoin at a predetermined price. These transactions take place on a conventional exchange instead of a crypto exchange.
By contrast, a spot Bitcoin ETF holds the underlying asset and can give investors the possibility to purchase Bitcoin at its current price, while also eliminating the need to navigate crypto exchange platforms and manage crypto wallets. Many believe that spot Bitcoin ETFs hold great advantages over futures ETFs as they ensure enhanced liquidity and facilitate price discovery.
Nevertheless, the risks associated with spot Bitcoin ETFs have posed a challenge to their approval, so where does this revived interest in spot Bitcoin ETFs come from? It all started back in June, when Blackrock, the world’s largest asset manager, submitted an application with the SEC. The fact that one of the most reputable financial companies decided to make such a bold move caused massive waves in the crypto space, and bolstered confidence in Bitcoin’s potential, sending a positive signal in the market.
This caused the Bitcoin price to surge and prompted other leading asset management firms like Bitwise, VanEck, Wisdomtree, Invesco & Galaxy, Fidelity, and Valkyrie to follow suit and file spot Bitcoin ETF applications with the SEC. While the SEC has already delayed the decision for all companies several times, analysts predict that 2024 will be the year when spot Bitcoin ETFs will get the green light.
The news of these filings was enough to stir the market and give the Bitcoin price a boost, so winning regulatory approval for a single spot Bitcoin ETF would mark a historical moment for the crypto industry and skyrocket Bitcoin’s price above $100,000.
The halving effect
Bitcoin is known for having a finite supply of 21 million coins that are released into circulation through a process called mining. In order to ensure scarcity and prevent inflation as new coins enter the market, Bitcoin has also set a specific mechanism in place known as halving. This reduces the reward for mining Bitcoin by half every 210,000 blocks which usually translates into a four-year period.
So far, Bitcoin has experienced three halvings and each of these events has been preceded and followed by a price appreciation phase. The last halving occurred in May 2020 and sent Bitcoin into a bull run that culminated with the historical high registered in November 2021.
The upcoming halving event is set to take place in late May or early April 2024 and if price movements follow the patterns of past halvings, Bitcoin stands a good chance to enter a new rally that will boost its price to unprecedented values. With the block reward reaching 3.125 BTC after being cut in half, the existing Bitcoin supply will become even more scarce which could drive demand for the asset.
While halving events offers no guarantee of a price increase, it’s not unreasonable to foresee a new bull run in Bitcoin’s future. The rise experienced by the asset in the last months of 2023 also seems to fall in line with previous pre-halving trends, further solidifying the belief that a major rally might be coming next.
Bottom line
Bitcoin is getting ready to cross the 2023 finish line on a positive note, so expectations for next year are high, to say the least. With the crypto winter already behind us and two major events giving investors hope for massive gains, the possibility of Bitcoin breaking new records seems more real than ever.
