The success of Bitcoin spot ETFs has significantly impacted Bitcoin’s price, especially in anticipation of the upcoming halving in April, when rewards for miners will be cut in half. This event, occurring every four years, aims to control inflation and reduce the rate at which new coins enter the market. Matthew Hougan from Bitwise believes that the combination of current demand and the upcoming reduction in supply creates favorable conditions for further price increases in Bitcoin. Since the ETF approval on January 10th, Bitcoin’s price has already risen by 14%, reaching approximately $53,000.
Bitcoin ETFs offer investors the opportunity to participate in the Bitcoin market without the need to directly purchase and store the cryptocurrency. The launch of 10 spot Bitcoin ETFs this January attracted billions of dollars in investments, made possible after years of awaiting SEC approval.
To prevent inflation, Bitcoin is programmed to limit the number of coins to 21 million, but halving slows down the pace at which new coins are created. In the period of upcoming demand pressure, this creates the conditions for significantly higher Bitcoin prices.
It’s impossible to say exactly how much higher the price will go, but issuers are already expecting it to exceed previous highs, including the last high price of Bitcoin around $69,000 recorded in November 2021. In a Bitwise report released before the ETF launch day, analysts predicted that the halving would lead to a supply shortage equivalent to a reduction of $6.2 billion in Bitcoin entering the market annually.
Ophelia Snyder, president of 21Shares, a spot Bitcoin ETF by Ark Invest, stated that she is optimistic about the direction of Bitcoin’s price ahead of the reduction. According to her, the daily demand for Bitcoin ETFs is “significantly greater” than the expected impact of the reduction.
