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This Bitcoin Halving May Not Result In Supply Squeeze: Glassnode

Glassnode has suggested that the upcoming Bitcoin halving might not result in a supply squeeze that the market may have anticipated.

Bitcoin Halving May Not Carry Same Impact Due To Spot ETFs

In a new report, the on-chain analytics firm Glassnode has discussed the impact the next Bitcoin halving may have on the economics of the cryptocurrency.

The “halving” is a periodic event for BTC where its block rewards (the rewards the miners receive for adding blocks on the network) are permanently cut in half.

This event is built into the coin’s code, meaning it happens automatically. The halving kicks in after every 210,000 blocks, or approximately every four years.

The next such event will take place sometime in the coming month. Historically, the halving has been considered an important event for the asset due to how it influences its supply dynamics.

The block rewards the miners receive are the only way to introduce new BTC tokens into circulation. Since they get tightened during these events, the cryptocurrency’s production rate slows down following them.

As such, halvings are considered bullish events, with the price increasing following them due to the constrained supply, as supply-demand dynamics would dictate.

“However, the current market conditions differ from historical norms,” says Glassnode. The reason behind that is simple; there is something now that was never there in the past: the spot exchange-traded funds (ETFs).

Spot ETFs are investment vehicles that buy and hold Bitcoin and allow their users to gain indirect exposure to the cryptocurrency’s price action through them. Since the spot ETFs are available on traditional exchanges, they can be preferable for those not looking to dabble with digital asset platforms and wallets.

Thus, the ETFs have introduced a notable amount of fresh demand for the asset, with supply rapidly leaving the market and entering these funds. To put this demand into perspective, the analytics firm has compared it against the BTC amount miners issue on the chain daily.

Bitcoin Miner Issuance Vs Spot ETFs

As the above chart shows, the Bitcoin ETF flows have generally been much higher than what the miners have been introducing into circulation. Based on this, Glassnode believes “the upcoming halving might not result in the supply squeeze once anticipated.”

The report further says:

The ETFs are, in essence, preempting the halving’s impact by already tightening the available supply through their substantial and continuous buying activity. In other words, the supply squeeze usually expected from halvings may already be in effect due to ETFs’ large-scale bitcoin acquisitions.

Something to note, however, is that the ETFs aren’t certain to always be a bullish influence for the market. Should the current inflow-heavy regime flip to one dominated by outflows, the cryptocurrency could naturally witness extraordinary selling pressure.

In fact, the spot ETF netflows have been negative for Bitcoin for four straight days now, so such a trend shift may already be in action.

BTC Price

Bitcoin had recovered beyond the $68,000 level yesterday, but the coin has since declined again, falling back towards $64,200.

Bitcoin Price Chart

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Bitcoin Back Above $48,000 – Is This Level The Springboard To $52,000?

Bitcoin roared back this week, clawing its way to $48,207 – its highest point since early January. This fiery ascent follows weeks of muted trading, fueled by concerns about institutional outflows and a post-ETF price dip. But what’s sparking this sudden surge? And can the digital dragon overcome its next hurdle?

Positive Winds Fill Bitcoin’s Sails

Several factors are propelling Bitcoin’s recent rally:

  • Spot ETF Momentum: The long-awaited launch of spot Bitcoin ETFs in January might be finally delivering on its promise. Potential inflows and positive sentiment surrounding these new investment vehicles are driving interest.
  • Halving Horizon: The Bitcoin halving, scheduled for May 2024, looms large. Historically, this event, which reduces the rate of new Bitcoin creation, has been linked to price increases, fueling investor optimism.
  • Market Synergy: The S&P 500’s recent ascent to record highs seems to be spilling over to the crypto market, creating a wave of positive momentum.
  • Lunar Luck? Bitcoin often experiences gains around the Chinese New Year, and this year is no exception. The “Year of the Dragon,” with its auspicious connotations, adds another layer of bullish sentiment.
  • ETF Absorption of Selling Pressure: Several ETFs have absorbed over a billion dollars worth of Bitcoin selling pressure in recent weeks, indicating underlying demand despite pre-ETF concerns.

But Can Bitcoin Slay The Resistance Dragon?

While the outlook seems bright, challenges remain:

  • Resistance at $48,500: Bitcoin faces a crucial resistance level at $48,500. Breaking through this barrier is key for a potential new all-time high.
  • Post-ETF Sell-off: Despite the recent surge, Bitcoin remains below its pre-ETF highs, sparking concerns about a potential sell-off after the initial excitement fades.
  • Volatility Reigns: Crypto remains a notoriously volatile asset, and predicting future price movements is fraught with difficulty.

Experts Weigh In: Bitcoin At $52K  

Sylvia Jablonski, CEO of Defiance ETFs, attributes the price appreciation to “recent inflows into the spot ETFs, the prospect of the halving, and general market momentum.” However, she cautions that breaking through resistance levels is never guaranteed, and investors should approach any investment with caution.

Meanwhile, Markus Thielen, the founder of 10x Research and head of research at Matrixport, predicted more rise in bitcoin prices using Elliott Wave theory, a technical study that makes the assumption that prices move in repeating wave patterns.

The idea states that price trends evolve in five stages, with waves 1, 3, and 5 serving as “impulse waves” that indicate the primary trend. Retracements between the impulsive price movement occur in waves two and four.

According to Thielen, BTC has begun its final, fifth impulsive stage of its uptrend, aiming to reach $52,000 by mid-March, after completing its wave 4 retracement and correcting to $38,500.

Featured image from Adobe Stock, chart from TradingView

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Solana (SOL) Bulls Imminent: Analyst Predicts Price Surge To $113

In the ever-fluctuating world of cryptocurrencies, Solana (SOL), which has witnessed a significant decline in price in the past few days, might be poised for a breakout soon toward the upward trajectory.

Solana Set To Hit The $113 Price Mark Soon

As the development unfolds, Ali Martinez, a well-known cryptocurrency analyst, has revealed his short-term price predictions for Solana. The analyst took to the social media platform X (formerly Twitter) to share his latest projections with the crypto community. 

In the X post, Ali Martinez has identified a notable shift in the direction of Solana. According to him, “SOL seems to be breaking out from a descending parallel channel.”

As a result, Martinez has predicted the price of Solana to reach a new yearly high of $113. However, this is anticipated to take place if SOL manages to hold its position “above the $94” price mark.

The post read:

Solana appears to be breaking out from a descending parallel channel. If SOL can hold above $94, it has a great chance of advancing toward $113.

Martinez’s price predictions for SOL came amidst the present market volatility, which is believed to be triggered by the Bitcoin Spot ETFs. Since the approval of the products, the larger crypto market has gone through a difficult time.

Solana

Major cryptocurrency assets in the market have witnessed a major decline in value over time. Nonetheless, the expert’s recent price overview has sparked new hope for SOL traders and investors.

Martinez’s positive price forecast for Solana has caused quite a frenzy in the entire crypto community. With SOL breaking free from a parallel channel that was falling, everyone is now talking about the token’s possible rise.

It is noteworthy that Solana has experienced a significant upswing in popularity in recent years, especially in 2023. Due to this, the project has become a preferred investment option for crypto aficionados and investors.

As of the time of writing, Solana was trading at $96.63, demonstrating a 10% increase in the past week. The digital asset boasts of a 47% rise in daily trading volume valued at $2.30 billion.

The SOL Ecosystem Buzzing With Activity

Lately, several exciting developments have put Solana’s ecosystem in the spotlight. One of the recent events is the introduction of the SOL-based meme coin Wen (WEN), which has seen a notable rise in its daily trade.

According to a report, the meme coin’s 24-hour trading volume has elapsed that of the popular Shiba Inu (SHIB) token. The token has had a remarkable rise in its daily trade, recording over 40% increase.

Data from the report shows that WEN recorded a whopping $115 million in its 24-hour trading volume. Meanwhile, Shiba Inu recorded a whopping $88 million in its daily trading volume.

Currently, the daily trading volume of the coin is sitting at $123 million, indicating a 76% increase. This suggests increased trader interest, which could be connected to the recent market activities specific to the coin.

Solana

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Bitcoin Spot ETFs Approved After 14 Years- The Journey So Far

The year 2024 marks the dawn of a new era, not just for technology but for finance, as a major victory was achieved for Bitcoin Spot ETFs (Exchang-Traded Funds). It’s now the era where the past will be appreciated for its foresight and doggedness. 

When the pioneer cryptocurrency and digital currency, Bitcoin launched in January 2009, it was nothing like a real-world asset or of an ‘agreed’ digital value, but an almost neglected bag of gold as it faced enough rejection from all phases. Even with Satoshi’s Whitepaper, Bitcoin wasn’t given a cordial welcome in the world of finance.

However, for all its promise, BTC remained shrouded in an air of mystery and skepticism. It took several years for Bitcoin to cement its value in the world of technology, finance, and the digital economy, assuming a giant role amidst many other cryptocurrencies. 

However, On January 10, 2024, the SEC, in its official filing, approves all 11 Bitcoin Spot ETFs. This long-awaited green light from the US SEC marked a watershed moment, not just for Bitcoin, but for the entire cryptocurrency industry. 

The 14-year journey to this point was arduous and paved with skepticism; regulatory hurdles loomed large, with the SEC citing concerns about market manipulation and investor protection as justification for repeated rejections. Attempts like Bitcoin futures ETFs offered limited exposure, failing to capture the true essence of a spot ETF’s direct price tracking. 

Bitcoin Spot ETF Explained

The recent approval of Bitcoin spot ETFs has stirred excitement across the financial landscape. But what exactly are these instruments, and what impact will they have on the future of BTC and, more broadly, on the investment landscape?

Bitcoin “Spot” ETFs (exchange-traded funds), unlike their futures-based counterparts, don’t track the price of Bitcoin futures contracts. Instead, they take a more direct approach, holding the underlying asset – Bitcoin itself – in secure digital custodians. 

This eliminates the potential for “basis risk,” a phenomenon where futures prices deviate from the actual cash price of Bitcoin. Simply put, Spot ETFs offer a more straightforward and transparent way to gain exposure to BTC’s price movements, akin to traditional gold-backed ETFs.

Bitcoin Spot ETFs function similarly to their traditional counterparts, such as those tracking stock market indices. They pool investor capital, purchasing Bitcoin and holding it securely. Each share of the ETF represents a fractional ownership of the pooled Bitcoin, allowing investors to participate in the market without directly holding or managing the cryptocurrency themselves. This eliminates technical complexities and potential security risks, particularly for those with limited crypto experience, potentially broadening the base of Bitcoin investors. 

The Genesis Of Bitcoin ETFs (Early Days and Conceptualization – 2013-2017)

The earliest sparks of a Bitcoin ETF concept date back to 2013, when the Winklevoss twins first proposed their Gemini ETF. Winklevoss twins, Cameron and Tyler, both tech entrepreneurs with a vision in 2013, submitted the first application for a Bitcoin ETF, the Gemini ETF, sparking the decade-long journey to regulatory approval. 

This audacious proposal was outrightly rejected by the SEC during the tenure of its former chairman, Jay Clayton, who later resigned in 2020 and became a supporter of cryptocurrency. Interestingly, Clayton is now actively involved in crypto regulations when he joined the advisory board of Fireblocks, a crypto custody platform.

The following years were a crucible of innovation and uncertainty. While Bitcoin’s market capitalization surged, attracting both fervent supporters and cautious observers, the SEC remained hesitant. The regulator’s concerns about market manipulation, price volatility, and the nascent state of blockchain technology were cited as justifications for repeated rejections of subsequent ETF proposals, including Grayscale’s attempt to convert its Bitcoin Investment Trust into a spot ETF.

Yet, amidst the rejections, there were flickers of progress. Technological advancements improved blockchain security and custody solutions, addressing initial concerns about vulnerability and potential wash trading. The global adoption of Bitcoin, particularly in Canada with its approval of Spot ETFs in 2021, served as a compelling case study for increased accessibility and market stability.

This period also saw the SEC’s stance slowly evolve. The appointment of Gary Gensler as SEC Chair in 2021 brought a newfound openness to dialogue and exploration of potential regulatory frameworks for cryptocurrencies. The approval of the first US-listed futures-based bitcoin ETF in October 2021, despite its limitations, offered a glimpse of what could be.

The Turning Point: A Decade Of Persistence Pays Off (2018-2023)

While the 2017-2018 crypto boom and subsequent crash sent shockwaves through the industry, it also served as a crucible, forging resilience and fueling a renewed focus on compliance and innovation. Industry figures like Grayscale, undeterred by previous rejections, continued to refine their proposals, incorporating crucial safeguards and addressing regulatory concerns.

This relentless pursuit of approval finally yielded results in 2023. In May, Cathie Wood’s ARK Investments filed for a spot bitcoin ETF, setting a definitive deadline for the SEC’s decision. 

Then, in June, BlackRock’s entry into the arena with its own Spot Bitcoin ETF application sent ripples of excitement through the financial world. This move by a traditional financial giant signalled a crucial shift in sentiment, demonstrating growing institutional confidence in BTC’s potential.

The months that followed were a whirlwind of activity. A flurry of applications from firms like Fidelity and Invesco poured in, fueled by the momentum of BlackRock’s move and the prospect of imminent approval. In August, a pivotal legal victory for Grayscale in the D.C. Circuit Court further strengthened the case for spot ETFs, forcing the SEC to re-examine its previous rejections.

Finally, the SEC, in a historic decision, greenlighted 11 spot bitcoin ETF proposals, including those from BlackRock, Fidelity, and VanEck. This moment marked the culmination of a decade-long struggle, signifying the mainstream acceptance of investor participation in the cryptocurrency space.

Ripples Across The Crypto Landscape: Implications Of Bitcoin Spot ETFs (2024)

The arrival of spot ETFs has cast a wide net, sending ripples across various spheres of the financial world. There are a lot of potentials and challenges presented by spot ETFs, vital impact on market stability, institutional adoption, and regulatory oversight. There are positive predictions that the Bitcoin market cap could rise above $1 Trillion after the launch of Bitcoin Spot ETFs.

Let’s contemplate the broader significance of this pivotal moment, what it means for the future of finance, and its relationship between technology and traditional financial systems here.

Investor Crossroads

For retail investors, Spot ETFs offer a convenient and familiar way to participate in the Bitcoin market without directly holding the cryptocurrency. This opens the door to broader adoption and increased liquidity, potentially leading to smoother price discovery and reduced volatility. The influential American magazine, Forbes predicted the BTC price will trade as high as $80,000 as a result of Bitcoin Spot ETFs’ approval. 

The year 2024 is also shaping up to be a good one, if not one of the best seasons for cryptocurrency, especially Bitcoin, as it’s the season for Bitcoin halving, which will have another mega impact on the crypto industry. 

However, the inherent risks of Bitcoin, including price fluctuations and potential exposure to fraud, must not be underplayed. Investors should approach spot ETFs with cautious optimism, ensuring a proper understanding of the technology, market dynamics, and associated risks before venturing in.

Institutional Embrace Bitcoin

The arrival of spot ETFs marks a significant step towards institutional acceptance of Bitcoin. The involvement of established financial institutions like BlackRock and Fidelity lends credibility to the cryptocurrency and paves the way for further integration with traditional financial products and services.

Concerns remain about the impact of institutional involvement on market manipulation and potential conflicts of interest. However, regulatory oversight and robust compliance frameworks will be crucial in ensuring a fair and transparent market for all participants.

Market Redefined

Spot ETFs could potentially lead to greater market stability by introducing institutional investors and their risk management expertise. This could mitigate some of the inherent volatility of the cryptocurrency market, attracting a wider range of investors and fostering sustainable growth.

The SEC’s approval represents a cautious acceptance, not a blank check. Further regulatory clarity and potential adaptation of existing frameworks might be required to effectively address the unique challenges posed by the integration of cryptocurrencies into mainstream financial systems.

Beyond Bitcoin

Spot ETFs could act as a gateway for investors to explore the broader crypto landscape. Their familiarity and ease of access might encourage exploration of other promising blockchain-based projects, accelerating the overall growth and development of the cryptocurrency ecosystem.

The success of spot ETFs will hinge on the continued evolution of blockchain technology and associated infrastructure. Scalability, security, and user experience will remain key areas of focus for ensuring the smooth functioning and widespread adoption of crypto-based financial products.

The 11 Spot Bitcoin ETFs products (with their ticker symbols) approved  on January 10, 2024, are:

  • Blackrock’s iShares Bitcoin Trust (IBIT)
  • ARK 21Shares Bitcoin ETF (ARKB)
  • WisdomTree Bitcoin Fund (BTCW)
  • Invesco Galaxy Bitcoin ETF (BTCO)
  • Bitwise Bitcoin ETF (BITB)
  • VanEck Bitcoin Trust (HODL)
  • Franklin Bitcoin ETF (EZBC)
  • Fidelity Wise Origin Bitcoin Trust (FBTC)
  • Valkyrie Bitcoin Fund (BRRR)
  • Grayscale Bitcoin Trust (GBTC)
  • Hashdex Bitcoin ETF (DEFI)

Conclusion

The approval of Bitcoin spot ETFs is a watershed moment, not just for the cryptocurrency itself, but for the entire financial landscape. It marks a new chapter in the saga of Bitcoin, one where its disruptive potential can be harnessed within the framework of established financial systems.

Also, this path forward is paved with both opportunities and challenges. Navigating regulations and addressing investor risk concerns are important to ensure seamless integration with traditional financial systems and regulatory bodies, which will be crucial in determining the ultimate success of this technological leap.

Final Thoughts

The approval of Bitcoin spot ETFs is not merely a regulatory green light; it’s a resounding declaration of Bitcoin’s arrival on the main stage of finance.

Related Reading: Celestia Network: How To Stake TIA And Position For 5-Figure Airdrops

However, the journey is far from over. This approval is a milestone, not a destination. As we stand at this turning point, it’s important to remember the spirit of defiance that birthed BTC. It was born from a desire for autonomy, for freedom from centralised control, and for a more equitable financial system. 

While ETFs offer a bridge between this decentralized world and the established financial order, it’s crucial not to lose sight of these core principles.

BTC price chart from Tradingview.com (Spot Bitcoin ETFs)

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Coinbase Bullish: Bitcoin ETF Approval Expected After SEC’s Defeat

In a recent CNBC report, Coinbase, the largest cryptocurrency exchange in the United States, expressed confidence in the approval of a US-based Bitcoin (BTC)  exchange-traded fund (ETF) by the Securities and Exchange Commission (SEC). 

Paul Grewal, Coinbase’s Chief Legal Officer, highlighted that the SEC’s recent court setback in the case of Grayscale’s proposed Bitcoin ETF has paved the way for a potential approval in the coming months.

Coinbase Eyes Bitcoin ETF Approval 

Grewal emphasized that Coinbase is hopeful about the approval of ETF applications due to their compliance with existing laws governing financial services. Grewal noted that prominent financial institutions have submitted robust proposals, indicating progress in the regulatory landscape.

The recent court ruling against the SEC stated that the regulator lacked a valid basis to deny Grayscale’s request to convert its GBTC Bitcoin fund into an ETF. 

The SEC chose not to appeal the ruling within the specified deadline, further increasing the likelihood of a BTC-related ETF gaining approval shortly.

However, Grewal acknowledged that the ultimate decision rests with the SEC, and he refrained from providing a specific timeline for the approval process. 

Nevertheless, Grewal expressed confidence in the SEC’s obligation to fulfill its responsibilities, particularly in light of the court’s decision and the requirement to apply the law impartially.

The introduction of a Bitcoin ETF would offer investors an alternative means to gain exposure to BTC without directly purchasing the cryptocurrency from an exchange. 

This could be particularly attractive to retail investors seeking Bitcoin exposure without the complexities of owning the underlying asset.

Per the report, Coinbase, being the largest crypto exchange in the United States, stands to benefit from the potential approval of a BTC ETF. The company’s common stock is held in portfolios designed to provide investors with crypto exposure.

Legal Troubles Mount For Grayscale’s Parent Company

While the recent court ruling has bolstered prospects for a BTC ETF, it is important to note that Grayscale’s bid to convert GBTC into an ETF is not without its challenges. 

Digital Currency Group (DCG), Grayscale’s parent company, along with crypto exchange Gemini and DCG subsidiary Genesis, face a lawsuit from the New York Attorney General, accusing them of defrauding investors of over $1 billion.

Despite the ongoing legal issues, Grewal remained positive about the approval of additional Bitcoin ETFs in the future as the SEC adheres to the law and evaluates pending applications neutrally.

The report also touched upon the recent performance of BTC, which has experienced a resurgence in 2023. With a 72% year-to-date increase, Bitcoin has rebounded from significant declines in 2022. 

Bitcoin

Factors such as anticipation surrounding the upcoming BTC halving event and investor reactions to the Federal Reserve’s potential interest rate policy changes have contributed to increased demand for the digital currency.

Ultimately while trading volumes have declined recently, attributed partly to retail investors’ reduced engagement in response to low volatility and industry players’ challenges, Grewal expressed optimism that various developments, including criminal trials and rigorous regulatory actions, will restore investor and consumer interest in the crypto market.

As the landscape for Bitcoin ETFs evolves, market participants will closely monitor the SEC’s stance and any potential regulatory developments that shape the future of cryptocurrency investment products.

Featured image from Shutterstock, chart from TradingView.com 

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US Bitcoin ETF Approval Could See North America’s ETF Volume Rise To 99.5%

North America could see its share in the global trading volume for crypto-related exchange-traded funds (ETFs) grow even further if spot Bitcoin ETFs are approved in the United States, a Bloomberg analyst said.

This comes after the US Securities and Exchange Commission (SEC) issued a delay letter regarding Ark Invest’s application for a spot Bitcoin ETF. In a widely-anticipated delay, the SEC is asking for new written comments on the spot Bitcoin application.

Some of the issues raised by the commission include the suitability of Bitcoin as an underlying asset of an exchange-traded product, and the resistance of Bitcoin to price manipulation, amongst other things.

The Ark Invest spot ETF, proposed by leading asset management firm ARK Invest in conjunction with Swiss-based 21Shares, would give investors indirect exposure to Bitcoin, the largest cryptocurrency in the market. 

This recent setback has raised questions about the fate of the spot Bitcoin ETF applications of other asset management companies, including Blackrock, Valkyrie, WisdomTree, etc.

North America’s Share Of Global ETF Trading Volume To Reach 99.5%?

In the event that the spot Bitcoin ETF applications get greenlighted by the SEC, Bloomberg ETF analyst Eric Balchunas said that the North American region may see its percentage of the crypto ETF trading volumes reach 99.5%.

According to his post on X (formerly Twitter), North America currently accounts for 97.67% of the total crypto ETF trading volume in the world. “If/when spot ETFs come out in the US this will likely go to like 99.5%,” Balchunas noted.

In another post, the Bloomberg analyst disclosed that most of the best-performing equity ETFs in 2023 are crypto-related. At the top of this list is $WGMI, the Valkyrie Bitcoin Miners ETF, with a year-to-date return of 227%.

This actively-managed fund invests in public companies in the Bitcoin mining industry, including Riot, Bitdeer, Cipher Mining, etc. Given the positive performance of these mining firms’ stocks, it is no surprise that investment products, like $WGMI, are doing well.

Other top-performing crypto-related exchange-traded products on this list include the VanEck Digital Transformation ETF, with a YTD return of 182%; the Global X Blockchain ETF, which has returned 168% so far in 2023; and the Bitwise Crypto Industry Innovators ETF, also up by roughly 168% year to date.

Pending Grayscale Lawsuit To Be Pivotal To Bitcoin ETF Approval

In 2022, Grayscale Investments sued the SEC for rejecting the application to convert its flagship product, GBTC, into a spot Bitcoin ETF. 

According to Nathan Geraci, president of the ETF Store, the final judgment in this lawsuit could prove pivotal in the race for Bitcoin exchange-traded fund. 

Geraci commented on the delay of Ark Invest ETF: 

It all comes down to the outcome of the Grayscale lawsuit & SEC’s view of question #4 here (referring to the fourth subject the commission is seeking comments on).

Earlier in March, Grayscale argued against the commission, questioning the logic behind allowing Bitcoin futures ETFs while disapproving similar spot Bitcoin funds.

Subsequently, the Grayscale legal team submitted a letter in July, urging the Securities and Exchange Commission to approve all eight applications for Bitcoin spot ETF.

Bitcoin ETF