Recently, Bitcoin hit $60,000, and it continues to grow. Investors were expecting that after the BTC price reaches a key resistance level of $48,600, it might go further to an important psychological level of $50,000. After reaching it, further price growth was expected.
However, even considering the Bitcoin price and its high volatility, it was difficult to forecast that it would move from slightly above $50,000 to over $60,000 during a couple of days.
Source: Coinmarketcap
The reasons for this growth are many and they are multifaceted. Here, we will delve into the most obvious ones.
Approval of Spot BTC ETF
In January this year, the SEC finally approved 11 spot BTC ETFs. It is an important milestone for the world’s biggest cryptocurrency. This event means that regulators are finally accepting cryptocurrency as a legitimate store of value and means of exchange. It also means that the regulation is maturing, and instead of suppressing the new financial sector, it tries to adapt to it and regulate it to reduce risks for users and investors.
The spot BTC ETF approval is beneficial also in matters of investing. With it, major institutional investors get access to the crypto market. And it, in turn, means an inflow of resources to the market. As Eric Balchunas, Bloomberg Senior ETF analyst posted on X, “Only halfway through trading day and New Nine bitcoin ETFs have already broken their all time daily volume record w/ $2.6b. We got 4 btc ETFs in Top 20. $IBIT is #4 overall, it's gonna trade more today than in its first two weeks combined. This is officially a craze.”
Source: X
And indeed, on Monday, just before BTC started its rally, the nine new spot BTC ETFs set a record in a new daily volume of combined 2.4 bln in selling and buying activities, with BlackRock’s IBIT and Grayscale’s GBTC leading the list.
Source: TheBlock
Considering that financial institutions continue buying Bitcoin to cover their ETF trading needs, it is going to power the BTC's further growth.
There are also voices that claim that ETFs won’t bring anything because huge volumes of Bitcoin will become concentrated in the hands of a few market players. On the other hand, the pressure of ETF trading would cause increased volatility which in turn would result in even higher risks for Bitcoin users.
However, the spot BTC ETF approval is for sure a significant milestone in Bitcoin history, and its impact on the market will be long-lasting.
The Coming Bitcoin Halving
Another event that may start impacting the Bitcoin price is the coming Bitcoin halving. A halving is an event that marks the mining rewards cutting in half. It occurs every 4 years, each time when 210,000 blocks are mined.
The first halving occurred in 2012, and it demonstrated its impact on the crypto market. Right after the halving, Bitcoin price started growing. The same pattern was repeated after the halving in 2016 and 2020.
Source: IG.com
It is expected that after the coming halving, the same trend will be observed.
The thing is that each halving cuts mining rewards in half which means that miners will get only half of the coins from the amount they used to get before halving.
However, mining expenses are very high, and equipment is also costly. This is why immediately after halving, it becomes not so profitable to use resources for adding new blocks. The rate of the creation of new coins slows down, the demand starts growing, and the BTC price starts growing, too. When the BTC price becomes high enough to compensate miners for the losses caused by the halving event, the speed of mining recovers.
Now, this major event in Bitcoin history will be amplified by the spot BTC ETF approval, and combined, they may send the BTC price to a new all-time high.
Crypto Market Moves in Cycles
Finally, the cryptocurrency market moves in cycles, like any other market. We have just recovered from a crypto winter, and thus, it is expected that the market will finally start growing.
It is unclear yet how long this growth will continue, but one thing is sure: after each rise, a new crypto winter will come.