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Bitcoin is the most popular cryptocurrency in the world, attracting a plethora of engagement from individual, retail and institutional investors. While the last year has been quite challenging for the marketplace, 2023 started off strong. Unfortunately, the momentum didn’t hold, and investors faced uncertainty yet again. Still, users continue adding cryptocurrencies to their portfolios and buy Bitcoin with debit card. Many believe that now is the best time to invest and add to your list of holdings considering that a bullish run appears imminent. Therefore, acquiring more assets is crucial before the prices become too high and, consequently, unsustainable for most investors.
ETFs
There has been considerable discussion around introducing Bitcoin ETFs to the market. These assets have divided the community since while some have been eagerly waiting for them for years as definitive proof that digital assets are accepted into traditional finance, others are more reluctant and have addressed the fact that exchange-traded funds wouldn’t have the decentralisation the cryptocurrency space is accustomed to.
However, there’s no denying that the effects on the prices would be largely positive, and that’s what many expect. The introduction of new functionality and features on the blockchain has always resulted in more significant engagement. The Ordinals are the latest example since, although many have deemed them unnecessary for the space, they have brought additional attention from users ready to get their hands on the tokens.
Now, some believe that Bitcoin is set to soar past the $150k milestone by the end of 2024 if the ETFs get a decisive ruling and are approved. This was supposed to happen on August 13th at the latest, but SEC regulators declined to come up with an answer, instead postponing the decision to the beginning of 2024. Now investors and companies can expect a response around March.
The astronomical price increase is because the demand will likely be much higher than the supply. That means the clearing price could climb to this colossal level or go even higher, at $180k. This is, of course, for United States-approved BTC assets, as Europe has already launched spot ETFs. However, other estimations are a little more realistic, saying that six figures in the price is an improbable scenario.
The next halving, set for April 2024, will likely boost the effect as well, so the momentum will hold for a while.
European launch
On August 15th, the first Bitcoin spot ETF went live in the EU on the Euronext Amsterdam exchange. This is over a year later than its planned launch in 2022. Reports have already started touting it as the first Bitcoin fund with physical backing. This allows investors to gain access to a new kind of asset, one that’s backed by cryptocurrencies.
The Guernsey Financial Services Commission approved the exchange-traded fund in October 2021. Fidelity Digital Assets is set to manage the custodial aspects and elements of the BCOIN ETF. The firm has discussed the fund’s socially and environmentally friendly features, which have become increasingly important for traders as well. The fact that crypto has become well-known for its high carbon footprint and energy-intensive processes has been a black mark on its reputation. As such, the platform has added a REC, a renewable energy certificate, to the ETF.
The certification exists on a blockchain network, meaning that investors can verify the claims and put aside worries about possible greenwashing activities. BCOIN will access real-time price data from exchanges. Spot ETFs are also an excellent way for investors to access the market without direct asset ownership. The news that Europe has moved ahead of the United States in this regard has been met with considerable excitement by the community.
It’s particularly good news for institutional investors, who want secure access to the benefits of digital finance, but within a more structured environment like that provided by the ETFs. This could also serve as a potential catalyst for increased adoption rates. Yet, the SEC’s decision to delay deciding on the issue of ETFs appears to confirm that it will still be a while until the US market will be in a similar position.
There’s still scepticism surrounding the possible market outcomes and price points, and the fact that there are numerous things that could change the way Bitcoin takes means that regulators are still assessing their options. Economic conditions, liquidity, interest rates and other Federal Reserve decisions, as well as unforeseen events, could all impact the market quite significantly, which is why the Securities and Exchange Commission is still debating the outcome of integrating Bitcoin ETFs into traditional markets even further. In the meantime, EU investors can enjoy the marketplace newcomer.
Short-term holders
Bitcoin was designed to serve the same purposes as fiat currency, but it didn’t end up fulfilling this role. In fact, it moved in the opposite direction, being recognized as a store of value and a potential hedge against inflation. Recent analysis suggests that speculators and short-term holders are becoming rarer, with the Bitcoin supply used in this way falling to just 2.56 million of the total.
The stagnant price action has been blamed for this, especially as many participants have been considering the fact that even more considerable price plummeting is underway. Bulls haven’t been powerful enough to break through the resistance and gain consistent support over $30k. This means that traders risk significant losses compared to long-term investors. Data shows that the STH cost basis is rapidly rising and is currently steadily approaching the $29k level. Contrasting with that, the figure for LTHs is only a little over $20,000.
The considerable gap between the two indicates that recent acquisitions have been performed at a relatively high acquisition price. However, others were quick to remark that on an even shorter timeframe, the top market remains quite heavy, and there are many price-sensitive investors that could incur losses.
The crypto market has been navigating a rough path on the road to recovery, and it is still not back to its full potential. However, that likely won’t last much longer, and Bitcoin will soon return to its former values.
