Historically speaking, Bitcoin has always made strong comebacks after each period of decline and this year’s events show that the asset is as resilient as ever. As shown by the BTC price chart, the coin jumped over 160% in the past twelve months, establishing itself as the undisputable winner of the cryptocurrency industry and leaving the rest of the market behind. Now, crypto enthusiasts are hoping that a similar story will play out in 2024 and help Bitcoin have a strong start to the year.
It wouldn’t be all that surprising to see the flagship crypto go on a massive bull run and surpass its past performances in the months to come. In fact, there are many voices supporting this optimistic outlook. But it wouldn’t be a shock to watch the asset plummet either. We’re used to both scenarios so whatever comes next is going to be in line with Bitcoin’s usual volatility.
However, it wouldn’t hurt to have at least a general idea of Bitcoin’s potential price movements for 2024. So, what’s more likely to happen in the next chapter of the Bitcoin saga: will the crypto continue on the path to recovery and break its previous record or is the appreciation trend going to stop abruptly and make room for a new price correction?
The promise of a spot Bitcoin ETF is making waves in the crypto market
Digital currencies, including Bitcoin, have been used as an investment mechanism for quite a while now, but they’ve also received a fair amount of criticism due to their speculative nature. With crypto having no intrinsic value and the potential for great returns being overshadowed by the risk of similarly great losses, crypto has remained a fringe investment venue despite its increasing popularity.
But now all this could change if the U.S. Securities and Exchange Commission gives the green light for the first-ever spot Bitcoin exchange-traded fund (ETF). One of the most notable events of 2023 has been represented by the applications that several major asset management firms have filed with the SEC. Investment giant Blackrock was the one to trigger the trend back in June and other agencies including Fidelity, Invesco, VanEck and WisdomTree followed in its footsteps creating a huge hype around the possible arrival of a spot Bitcoin ETF.
Unlike derivatives-based Bitcoin ETFs which use instruments like futures contracts to track the Bitcoin price, a spot Bitcoin ETF would offer investors exposure to Bitcoin’s actual price and provide ownership of the asset while eliminating the need to store or manage the funds themselves.
In the past, none of the firms that submitted applications for a spot Bitcoin ETF have been successful, as the SEC rejected their proposals maintaining that the risk of market manipulation and fraud remains too high. However, this time the SEC seems to take longer to review the applications, having delayed their decision several times already.
Many analysts believe this to be a sign that the SEC is ready to give the seal of approval for the first spot Bitcoin ETF, which could lead to major changes in the crypto market. The SEC is due to make a decision for the applications filed by ARK and 21 Shares by 10 January and the market is almost certain that a bulk approval is coming in the first month of the year. This would mean greater legitimacy for digital assets and a huge step forward towards achieving mainstream acceptance.
These developments have already caused the Bitcoin price to rise several times this year, so one can only imagine the boost Bitcoin would get if the SEC gave a favorable answer. This will not only build trust and confidence in the asset and encourage more people to jump on the Bitcoin bandwagon but will also improve its reputation and bolster its position in the financial system.
A new halving on the horizon
While the approval of a spot Bitcoin ETF is only a possibility, the upcoming halving is a certainty. The reward for mining Bitcoin is cut in half every four years or so in an event known in the crypto community as the halving. This is meant to control the number of new coins that are released into circulation and ensure the scarcity of the asset.
The halving is a pre-programmed technical event that we’ve already witnessed three times and, on each occasion, it triggered a jump in the Bitcoin price. The next halving is expected to take place in April 2024, so analysts have strong reasons to believe that Bitcoin will experience a considerable appreciation in the months leading up to the event and see an even greater boost afterwards. If this theory proves to be true, then Bitcoin is poised for remarkable growth in 2024.
On the other hand, we can clearly see that regulators continue to rule with an iron fist. The SEC’s job is not only to review applications for different crypto-based services but also to oversee the overall activity in the crypto market and by the looks of it they’ve taken this responsibility quite seriously. In 2023, the SEC has taken over 130 enforcement actions related to crypto assets, including several charges against reputable crypto exchanges, so the crackdown on the cryptocurrency industry is intensifying.
The fact that digital currencies are gaining more ground in the financial sphere doesn’t seem to sway regulators to embrace a more relaxed approach, so this might have a negative impact on Bitcoin’s price and popularity.
Wrapping up
Bitcoin has made an impressive recovery in 2023 and the prospects for 2024 are generally optimistic at the moment, with the asset trading at $42,473. However, in the ever-changing crypto-landscape, volatility is a given, so Bitcoin’s fate is far from sealed. The industry, with Bitcoin at its forefront, may be poised for a comeback, but there are plenty of challenges and many uncertainties on the horizon that one should not ignore.
