Bitcoin’s supply cap of 21 million units has attracted a significant amount of interest from investors, leading to over $25 billion flowing into spot exchange-traded funds so far this year. With more than 19 million units of bitcoin already mined, the supply of the digital currency is becoming increasingly constrained. Additionally, the upcoming halving event scheduled for April 16, 2024, will reduce the daily issuance of new bitcoin from 900 to 450 units, potentially leading to a price surge that could see bitcoin top $100,000 by the end of 2024.
The approval of spot-based bitcoin ETFs by the Securities and Exchange Commission led to record-breaking debuts for products issued by firms like BlackRock, Fidelity, and Invesco. These 10 new ETFs have amassed $35 billion in assets under management, most of which represents new inflows. The demand for bitcoin is outstripping supply, with net inflows into these ETFs already exceeding the new supply generated by miners by a factor of more than 2.8-to-1.
The post-halving demand for bitcoin is expected to continue exceeding supply as the daily issuance of new bitcoin is cut in half to an average of 450 units. This disparity in supply and demand could lead to a ratio of roughly 5.7 times, further driving up the price of bitcoin. Historical data shows that previous halvings in 2016 and 2020 resulted in significant price increases of close to 16% and 24%, respectively, in the following months.
Market analysts are doubtful that the high net inflows into bitcoin ETFs are a result of market participants front-running the expected post-halving price jumps. Investors seem to be allocating to bitcoin as a hedge against currency debasement and as a means of diversifying their portfolios. If demand for bitcoin continues to increase, investors might see significant price appreciation, making it a good time to consider investing in the digital currency through ETFs, direct purchases, or shares in companies like MicroStrategy or Coinbase.
Following the halving event, investors may witness bitcoin struggling to break through the $70,000 threshold, as historical patterns suggest a possible drop-off and sideways movement before the real bull market begins. Analysts predict that the real bull market might start in late 2024 or early 2025, with bitcoin prices potentially reaching $100,000 in 2024. Investors looking to gain exposure to bitcoin’s potential upside can consider purchasing shares in bitcoin covered-call ETFs like the Roundhill Bitcoin Covered Call Strategy ETF or companies like MicroStrategy or Coinbase.
In conclusion, the current demand for bitcoin is exceeding its supply, with the upcoming halving event further constraining the availability of new units. This imbalance could lead to a significant price surge for bitcoin, potentially surpassing $100,000 by the end of 2024. Investors interested in gaining exposure to the digital currency can consider various options, including direct purchases, ETFs, and shares in companies closely associated with bitcoin.
