By Matteo Greco, Research Analyst at the publicly listed digital asset and fintech investment business Fineqia International
Bitcoin (BTC) concluded the month of March at approximately $71,300, marking a 16.6% increase from the previous month’s closing value of around $61,150. This monthly surge represents a historic milestone for BTC price action. March witnessed the seventh consecutive month of price growth for BTC, a first since its inception.
The sustained price appreciation began in Q4 2023, as market participants anticipated a high probability of BTC Spot ETFs approval in January. This anticipation was followed by the actual approval of BTC Spot ETFs in early January 2024. Throughout Q1, BTC surged from $42,300 at the beginning of the year to approximately $71,300, reflecting a 64.7% increase in price. However, in the first few days of April, BTC witnessed a decline, with the price hovering around $66,500 at the time of this writing.
The recent price growth is primarily fuelled by demand for BTC Spot ETFs, which have accumulated over $12 billion in net inflows since their inception. Last week, BTC Spot ETFs saw approximately $850 million in net inflows, followed by $85 million in outflows on April 1st and $40 million in inflows on April 2nd.
While there is still strong overall net inflow in BTC Spot ETFs, there is also evidence of reduced sustained demand and some profit-taking, leading to a slower pace of cumulative inflows compared to previous months. This is to be expected, considering that the majority of BTC Spot ETF investors are already in profit, given that BTC was priced between $40,000 and $45,000 at the time of their launch.
The upcoming BTC halving event, currently expected for April 20th, just seventeen days away, will halve block rewards for miners from 6.25 to 3.125 BTC, potentially impacting mining companies. With BTC block rewards decreasing and the BTC hashrate consistently rising over the past few years, the profitability of mining farms has steadily declined, necessitating greater capital efficiency to remain viable.
This dynamic compels mining companies to optimize capital efficiency and seek cheaper electricity sources, leading to an increasing use of renewable energy in BTC mining. The BTC mining rewards mechanism inherently drives greater efficiency with each step, enhancing network security, reducing carbon emissions, and promoting research into sustainable block confirmation methods.
Historically, BTC halving events have marked significant points followed by 9-18 months of uptrend, culminating in cycle peaks. However, for the first time, BTC reached its all-time high in anticipation of the halving, indicating a departure from previous cycles. If historical patterns repeat, we may witness an uptrend for the remaining nine months of 2024, leading to a cycle peak expected between Q4 2024 and Q2 2025.
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