Unleashing the Full Power of Bitcoin: How High Demand for ETFs May Have Sabotaged the Halving’s Bullish Momentum

    According to experts, the ⁤upcoming halving⁣ of Bitcoin may not have the same impact on its price as seen in previous‌ cycles.

    This ⁣is due to the strong demand from spot Bitcoin Exchange-Traded Funds​ (ETFs), which have already pushed the price of ⁤Bitcoin to new highs.

    However, the long-term effects of the ⁢halving on Bitcoin’s‌ price and⁢ the flows into​ ETFs ​are expected to be positive.

    Bitcoin’s halving, ‍which occurs every four years, has historically put upward pressure on the price ​of the largest digital asset.‌ In previous cycles, this ⁤has led to new all-time highs. This time, the demand from spot‌ ETFs may ​add even more fuel to the rally.

    Off the Chain Capital’s CEO, Brian ⁢Dixon, stated, “The demand from ETFs has already created a ‍tremendous supply shock since their ⁣launch. When the halving occurs and the supply is reduced ⁣further, it is logical to expect an increase in price.”

    On the surface, this may seem to be the case as the demand from​ ETFs has exceeded the 900 new BTC that are mined daily. With​ the halving cutting this supply‌ in half, there could be an even greater pull on prices.

    However, there⁢ are concerns that this time, things may⁤ not play out the same way.

    Since⁢ the start of the year, the price ⁤of Bitcoin has​ increased by 46%, coinciding with the ⁣launch of spot ETFs in the U.S. The demand from these funds has been so strong that the price ​of Bitcoin reached a new⁣ all-time high to keep up with the influx of purchases. But there‍ is a growing suspicion that the⁤ hype may have caused the market⁢ to overextend.

    FalconX’s Head of Research, ‍David ⁤Lawant, stated, “This is the first time⁤ Bitcoin has broken its all-time high before⁢ a halving. There is concern that ETFs have pulled demand forward‍ and that we may‍ experience a plateau‌ for a while.”

    Anthony Anderson, founder and CEO of Param Labs and Kiraverse, agrees,‍ stating that “Bitcoin ETFs have preempted the impact of the halving on supply by accumulating a massive amount of BTC since the beginning of the year.”

    In addition, it is not expected‍ that ‌the halving will have ‍a significant effect on ETF‍ flows in the short⁤ term due‍ to the already strong demand from investors. Bloomberg Intelligence’s ETF analyst, James Seyffart, explains, “We know that many miners use OTC ⁢desks to sell their ‌BTC, ⁢and ETF issuers also use OTC desks to⁤ obtain Bitcoin as inflows come into the fund. Therefore, there is a chance that the halving of miner sales may have a bigger impact on ETF inflows. However,‌ in the past few months, ETF inflows have exceeded anything provided by miners.”

    He adds, “If the halving does have an impact, ‌it ⁢is unlikely to be‍ significant in my opinion.”

    However, this​ does not mean that the halving will not ⁣be a ​crucial factor in the long term for both Bitcoin and⁣ ETF flows. ⁢The success of ETFs and the price of Bitcoin are closely correlated, and the​ halving may increase the appeal of Bitcoin as an‍ asset class to ​institutional investors. Bob Iacchino, co-founder of Path ‌Trading ⁣Partners,‍ believes that “the halving will be one‍ of the best things for Bitcoin since ‍the launch of ETFs.” He⁣ adds, “Bitcoin’s core feature is an inflation protection mechanism, and inflation is on the rise again.”

    In fact,⁤ the hype surrounding the⁤ halving‍ could bring Bitcoin ⁣to the attention ​of many investors who are searching for⁤ alternative‍ assets to⁢ hedge against ‍macro volatility. According to Lawant, “The halving is occurring at ⁢a time when investors are uncertain about the global economy and are⁣ looking for ways to protect their portfolios. Having⁢ a spot ETF and an asset with a decreasing supply would be positive‍ for ​ETF flows.”

    The reduction in supply, caused by‌ the⁢ halving, may have a ‍long-term impact on ETF flows as it affects the “marginal supply into perpetuity,” according to Seyffart. ​He explains that even⁤ though the impact of ETF‍ inflows in the first three⁣ months of this‍ year has been significant, the halving will have a permanent​ and perpetual impact on the supply of BTC.

    While there may be short-term volatility in ​Bitcoin’s price and ETF flows after the halving, ⁤Anderson predicts that in the long term, ⁢the ⁣inflow for these funds will remain steady.

    Edited by Aoyon Ashraf.

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