Factors Driving the Price Increase
Breakout Inflection Year for Crypto
Bitcoin’s Performance in 2023
Read: How a big, messy ‘cleanup’ in crypto could pave the way for a more regulated and mature market in 2024
Expectations for the Approval of a Bitcoin ETF
In the world of cryptocurrency, the approval of spot bitcoin ETFs could have both short-term and long-term effects. Analysts at AllianceBernstein predict that if approved, there may be a brief and shallow selloff of bitcoin as some traders sell their coins to lock in their gains. However, these ETFs have the potential to attract institutional investors and gradually increase inflows, which could ultimately drive up the price of bitcoin.
The analysts believe that the build-up of bitcoin ETF flows will be a gradual process. However, the applicants for these ETFs will be fiercely competing to establish an early lead in this significant asset accumulation game. To gain an edge, they will likely focus on advertising and branding strategies specific to bitcoin, creating a snowball effect in the market.
According to the analysts, they anticipate approximately $5 billion in inflows to bitcoin ETFs during the first half of 2024. This figure is expected to rise to around $10 billion in the second half of that year. Looking ahead to 2028, the analysts estimate that about 10% of all bitcoin could be held within ETFs.
In addition to the potential impact of bitcoin ETFs, the upcoming bitcoin halving event is also anticipated to provide a positive boost. During this event, the rewards given to miners will be halved. Historically, bitcoin’s price has experienced significant appreciation in the months following these halvings.
Switching gears to ether, the analysts also expect exchange-traded funds investing in ether to receive approval by June of this year. If this comes to fruition, ether will be the only cryptocurrency other than bitcoin to have a dedicated ETF for direct investment.
Overall, the introduction of bitcoin and ether ETFs has the potential to shape the cryptocurrency market in various ways. While there may be initial sell-offs and volatility surrounding bitcoin, the gradual increase in institutional inflows could have a positive impact on its price. Additionally, the approval of an ether ETF would further solidify its position as a prominent cryptocurrency alongside bitcoin.