From Bit2Me we want to share the 7 keys that, in our opinion, explain what is happening and what we believe will happen in the coming months.
How has bitcoin tripled in value in one year from $20,000 to almost $70,000? ¿What’s going on? It was not dead? While many predicted it, the big players – banks, funds like BlackRock, large fortunes, among others – have not stopped. And our clients have traded x10 in the last 3 months.
The year 2024 is very special. Not only because of the particular characteristics that this cryptocurrency has accustomed us to, but also because of the confluence of multiple factors. From Bit2Me we want to share the 7 keys that, in our opinion, explain what is happening and what we believe will happen in the coming months.
1- The emergence of crypto in ETFs: since January of this year, it is possible to acquire virtual assets beyond the exchanges, as it was until now. By adding operations from traditional financial markets such as Exchange Traded Funds (ETFs), a much larger demand is generated than existed until now. That is why, as of that date, the ETFs have accumulated about 80,000 bitcoins, which is equivalent to an average of 4,000 bitcoins or 250 million dollars per day. If we take into account that about 900 bitcoins are mined daily, we are facing a very high demand only considering that coming from ETFs, which would reach one million bitcoins annually.
2- The scarcity factor: bitcoin, an engineering marvel, is a truly scarce asset. They have rarely been seen active in finite markets. Fiat money is not finite, since currencies can be printed, generating new monetary bases. Shares can make capital increases. And the same thing happens with raw materials, since new deposits or reserves may appear. Only gold can be considered more scarce. But suddenly bitcoin appears on the scene, with a final issuance – based on exact mathematics – of only 21 million, a volume that will never change.
3- The long-awaited halving: This technical process is programmed in the bitcoin open source and defines the issuance moments that this crypto will go through throughout its journey. The concept is simple: every 10 minutes new units of bitcoin are issued into the system and every four years the amount of bitcoins distributed in those 10 minutes is divided. It is estimated that between April 18 and 20 we will witness a new division, that is, we will be in the presence of the fourth halving in the history of bitcoin and with it, the beginning of a new cycle. As previous halvings show, at this time there is a significant increase in prices, linked to the greater shortage that is generated.
4- The MICA factor: The proposal for the Regulation of Cryptoasset Markets (MICA) developed in the European Union is a regulatory framework developed since 2018 to help regulate, homogenize and organize the virtual asset system.
5- The entry of institutional actors: In Europe, banks have begun efforts to enter the crypto business, developing the necessary infrastructure to begin offering virtual assets in the near future. At Bit2me we already have large clients with these characteristics, such as Telefónica (which a few days ago announced the launch of its own wallet), BBVA and several Fintech companies.
6- The new frontiers: The crypto asset market seems to be reaching its limits, beyond ETFs, which will continue to benefit its adoption. Following the move by the Securities and Exchange Commission (SEC), the British authorities are considering approving Exchanges Traded Notes (ETNs), promissory notes that are listed on the stock exchange. These debt security instruments would be backed by cryptocurrencies. In this way, the British regulator intends to expand crypto-based products for professional investors. The Financial Conduct Authority (FCA) announced that it would not oppose this request if professional funds formalize their professional requests.
7- The international economic context: The economic context of constant uncertainty, such as the growth of inflation on a global scale in recent years and debt in the most advanced countries, means that there is more interest in virtual assets such as bitcoin. US debt is gasoline for bitcoin. According to various banks, the country’s leverage increases by one trillion dollars every 100 days, which implies a degradation in its value that will represent 9.3% of the gross domestic product (GDP) in four years, from 6%-7%. current. With this premise, assets such as gold and bitcoin, which serve as a refuge to hedge against a weaker dollar, may be reaching around all-time highs.
Source: Ambito
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