The crypto market is rejoicing in a bull rally, with multiple factors accounting for the run. The long-running market slum ended with US Bitcoin ETFs getting approval from the SEC.
With Bitcoin set to conduct its halving in 2024, the market is brimming with positive outlooks. The programmed event is scheduled for April and has historically helped Bitcoin reach new heights.
Now, even traditional investors are being exposed to crypto, thanks to Spot Bitcoin ETFs offering a regulated option. The moderated asset has already helped Bitcoin hit its all-time high of 72,850 dollars.
But what would be the combined impact of BTC ETFs and halving on the crypto market? Let’s analyze.
The Upcoming Bitcoin Halving
Every 4 years, Bitcoin reduces its miners’ block rewards by 50%. The process halves the rate at which BTC enters circulation. Since Bitcoin has a supply cap of 21 million coins, halving makes it even more scarce.
Historical data shows a direct correlation between Bitcoin halving and price hikes. Bitcoin surged 1500% after the 2012 halving and 1200% after the 2016 halving, while the 2020 halving led to Bitcoin hitting its all-time high in 2021. Given the current market conditions, the 2024 halving can be even more significant.
However, experts believe that crypto adoption and institutional investors’ interest can lead to a sustained price increase.
Introduction to Spot Bitcoin ETFs
A major change that Bitcoin has witnessed is the introduction of Spot BTC ETFs by Mudrex for Indian investors. Since these exchange-traded funds hold Bitcoin, they expose investors to BTC’s price movement without managing digital wallets.
These ETFs cater to new and traditional investors with regulated investment options. However, these tools also lead to lower volatility, potentially pushing away day traders looking for quick profits.
Combined Effects on the Crypto Market
The halving reduces the Bitcoin supply, creating a scenario where demand from new investors outpaces the available Bitcoin supply. This imbalance can potentially lead to a massive price hike for Bitcoin.
In a similar manner, market optimism can be simulated by favorable news surrounding the launch and halving of an ETF. ETFs that facilitate easier access may also contribute to the mainstream acceptability and expansion of cryptocurrency usage.
Potential Risks and Challenges
The biggest challenge with cryptocurrencies is their volatile nature. According to the FCA, external factors like security breaches and regulatory changes can significantly affect price predictions.
Moreover, the possibility of a market correction remains even if there is a quick price hike. Whether the price surge can be maintained depends on emerging regulations and the overall market sentiment.Â
In Conclusion
The recently introduced Bitcoin Spot ETFs and the upcoming halving have the potential to boost the entire crypto market. The most probable outcome is wider acceptance of crypto and a price surge.
However, it is crucial to understand that cryptocurrencies are volatile in nature and carry additional risks. Therefore, it is pivotal to consider market sentiment and regulatory changes before making an investment.
Nevertheless, the future trajectory of the cryptocurrency market may be influenced by the cumulative impact of these occurrences.
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