Bitcoin, the leading cryptocurrency, has surged to a one-month high, crossing the $46,000 mark, buoyed by steady inflows into several US funds dedicated to the digital asset. At the same time, attention is intensifying on the upcoming halving event scheduled for April.
At the time of writing on Friday, Bitcoin’s price stood at $46,175, marking a 2% increase and pushing its 2024 rally to approximately 9%. This upward movement has not been limited to Bitcoin alone; other cryptocurrencies like Ether, Solana, and Cardano have also experienced positive momentum.
The recent debut of nine US spot Bitcoin exchange-traded funds (ETFs) on 11 January, alongside the conversion of the Grayscale Bitcoin Trust into an ETF, has expanded accessibility to Bitcoin investment vehicles. These developments have attracted significant investor interest, with a net inflow of $8 billion into the new funds. Notably, the outflow from the Grayscale fund, amounting to $6 billion since its conversion, is showing signs of stabilisation.
Caroline Mauron, co-founder of Orbit Markets, a digital-asset derivatives liquidity provider, views the tapering off of Grayscale outflows as a signal for Bitcoin to resume its upward trajectory. Moreover, she emphasises the growing momentum behind the “halving narrative,” which could propel Bitcoin beyond the $50,000 mark in the coming weeks.
The impending halving event, occurring approximately every four years, plays a significant role in Bitcoin’s market dynamics. Scheduled for April, this event will reduce the block rewards for miners from 6.25 coins to 3.125 coins, thereby halving the rate of new Bitcoin issuance. This mechanism is integral to Bitcoin’s design, ensuring a finite total supply capped at 21 million tokens.
Historically, previous halving events have been associated with strong bullish trends in Bitcoin’s price. Analysts, including a team led by DBS Bank Ltd. Chief Economist Taimur Baig, argue that the reduction in mining rewards necessitates a corresponding increase in Bitcoin’s price to maintain miners’ profitability. This economic principle suggests a favourable environment for price appreciation following the halving.
Amid the growing anticipation for the halving, managing partner and founder of Skybridge Capital, Anthony Scaramucci has made a bold prediction, forecasting a surge in Bitcoin’s price to $170,000 following the upcoming halving event. Scaramucci bases his prediction on a detailed analysis of Bitcoin’s halving cycles.
Scaramucci outlined his formula for projecting Bitcoin’s growth trajectory. He predicts a fourfold increase in Bitcoin’s value within 18 months of the halving event, utilising a minimum price of $35,000 as a conservative estimate. His long-term outlook for Bitcoin extends even further, envisioning a potential price of $400,000, approaching half of Gold’s market capitalisation.
With the halving event on the horizon, Bitcoin’s potential for a significant price surge has captured the attention of investors and analysts alike. Scaramucci’s bullish forecast underscores the optimism surrounding Bitcoin’s prospects in the coming months. As anticipation builds, the cryptocurrency market braces for what could be a transformative period marked by heightened volatility and the potential for substantial gains. Investors are advised to stay informed and exercise caution amid the evolving landscape of digital assets.
Following the approval of Bitcoin exchange-traded funds (ETFs), the cryptocurrency has witnessed a notable shift in its trajectory. The increased accessibility afforded by ETFs has expanded the investor base for Bitcoin, driving significant inflows into the market. Moreover, the legitimisation of Bitcoin through regulated investment vehicles has bolstered confidence among institutional and retail investors alike.
This newfound acceptance has contributed to Bitcoin’s recent price surge and underscores its growing prominence as a legitimate asset class within the broader financial ecosystem. As Bitcoin continues to evolve in response to regulatory developments and market dynamics, its role as a leading digital asset is poised to solidify further in the years ahead.
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