Bitcoin exceeds $41,500 on ETF optimism and Bitcoin halving

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Vrasidas Neofytou
Head of Investment Research

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Bitcoin exceeds $41,500 on ETF optimism and Bitcoin halving

Bitcoin broke past $41,500 Monday morning, posting a fresh 18-month high, continuing its climb from $27,000 starting in October, while Ethereum climbed as high as $2,260, and Solana to $65, on growing optimism over a looming approval of U.S. spot-based Bitcoin ETF approval, as well as the bitcoin halving in 2024.

The world’s largest digital currency by market cap and the other altcoins and meme tokens are attracting renewed attention, amid growing confidence that a Bitcoin spot ETF is soon to be approved by federal regulators-SEC.

A spot Bitcoin ETF could allow previously cautious retail and institutional investors access to the crypto ecosystem via the U.S. stock market (who have previously been reluctant to touch crypto), leading a fresh wave of capital into the sector, especially from the $14 trillion-worth U.S. financial market.

Blackrock, the world’s largest asset manager, has proposed a spot Bitcoin exchange-traded fund (ETF) with the SEC in early summer, which it would be able to buy Bitcoin at the end of the trading day to bring the fund's assets in line with its trading price, while a Bitcoin Trust does not have the ability to do this.

Hence, the Bitcoin halving event scheduled for May 2024 is another bullish catalyst for the recent price rally, reducing the available supply of new Bitcoin coins into the market.

Halving is when miners, which are entities who uphold the Bitcoin network, see the rewards for their work cut in half, keeping a cap on the supply of Bitcoin (of which there will only be 21 million coins) and is often a factor behind a new rally.

The Bitcoin halving events in 2012, 2016, and 2020, were all followed by new all-time highs for Bitcoin in the following 12 months, with traders speculating a repeat of the rally again in 2024.

Market reaction:

In the above context, traders have turned very bullish across the crypto ecosystem, with Bitcoin breaking above $40,000 for the first time since April 2022, surging up to $41,700, posting 11% gains in the last 7 trading days, and gaining nearly 150% since the start of 2023.

BTC/USD, Daily chart

Ether, the coin linked to the Ethereum blockchain network, also made a 1-1/2 year high on Monday, hitting $2,253, posting 10% gains in the last 7 trading days, and nearly 90% year-to-day.

The growing excitement that a Bitcoin exchange-traded fund (ETF) may soon be approved has triggered a rally in altcoins and meme tokens as well, with Solana climbing to $65, XRP to $0.65, Cardano to $0.42, Dogecoin to $0.091, and Shiba Inu to $0.0000094.

Solana’s gains exceeded 540% year-to-date, followed by Link’s 190% yearly gains, while Avalanche gained 110%, XRP added 90%, and Cardano 70% in the same period.

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