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May 27, 2024
PI Global Investments
Bitcoin

A Pivotal Year for Bitcoin with SEC’s ETF Approval and Halving Event Reshaping Digital Asset Dynamics


2024 is already shaping up to be a transformative year for digital assets broadly, and bitcoin particularly. With SEC approval for a spot bitcoin ETF last week and bitcoin’s next halving event scheduled for April, we anticipate key shifts in both the supply and demand. Understanding these shifts is critical to understanding what role digital assets may play in the years ahead as they help to foster worldwide financial accessibility.

On the demand side, the SEC’s potential approval of a spot bitcoin ETF should open the door for a significant number of new investors seeking exposure to the price of bitcoin directly in their traditional investment accounts. They can now forego the complexity of dealing with crypto exchanges, and access a familiar investment vehicle — an ETF. This will spark both higher liquidity and greater price stability in bitcoin. Equally importantly, the SEC’s approval represents a significant milestone for bitcoin’s growing legitimacy with established financial institutions.

As for supply, bitcoin’s scarcity increases approximately every four years with each halving event. Bitcoin halving is the process in which the reward for Bitcoin miners is cut in half, reducing by 50% the rate of new bitcoin issuance. With the next halving expected in April 2024, the block reward will be 3.125 versus 6.25 today.

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This historically has led to significant increases in BTC price in the months and years following each (see chart). While the actual timing of this event is predictable, the market takes time to find a new price equilibrium. Looking at Bitcoin’s prior halvings, we see significant increases in the months and years following each.

Bitcoin’s last halving occurred on May 11, 2020, when the block reward decreased from 12.5 BTC to 6.25 BTC. Bitcoin has grown at a 52% compound annual growth rate since that event, with the most rapid rise occurring in the first nine to 12 months following the event. The halvings prior to 2020 produced a similar trajectory.

The combination of these factors makes a compelling investment case for bitcoin and offers a potential entry point. Using a stock-to-flow model, which attempts to quantify the value of an asset which has a limited supply, we find an implied value of approximately $62,000 per bitcoin in April 2024, representing roughly a 34% increase relative to the current price as of January 10.

The landscape of digital assets, particularly bitcoin, is set for significant change this year. The SEC’s approval for a spot Bitcoin ETF and the halving event in April are poised to reshape both the supply and demand dynamics of Bitcoin.

For a deeper dive into the transformative power of digital assets, Global X recently published our latest Charting Disruption report, our annual deep-dive into the trends and technologies shaping the economy of tomorrow.



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