By Matteo Greco, Research Analyst at the Listed Digital Assets and Fintech Investment Sector Fineqia International
Bitcoin (BTC) closed the month of March at approximately $71,300, up 16.6% from the previous month’s closing value of approximately $61,150. This monthly increase represents a historic milestone for BTC’s price action. March witnessed the seventh consecutive month of price growth for BTC, a first since its inception.
The sustained price increase started in the fourth quarter of 2023, when market participants expected a high probability that the BTC Spot ETFs would be approved in January. This expectation was followed by the actual approval of BTC Spot ETFs in early January 2024. During the first quarter, BTC rose from $42,300 at the beginning of the year to approximately $71,300, reflecting a 64.7% price increase. However, in the first few days of April, BTC witnessed a decline, with its price hovering around $66,500 at the time of writing.
The recent price growth is mainly fueled by demand for BTC Spot ETFs, which have accumulated net inflows of over $12 billion since their inception. Last week, BTC Spot ETFs saw net inflows of approximately $850 million, followed by $85 million in outflows on April 1 and $40 million in inflows on April 2.
While there are still strong overall net inflows into BTC Spot ETFs, there is also evidence of reduced sustained demand and some profit taking, leading to a slower pace of cumulative inflows compared to previous months. This is to be expected, considering that the majority of BTC Spot ETF investors are already making profits, as BTC was priced between $40,000 and $45,000 at the time of launch.
The upcoming BTC halving event, currently expected on April 20, just seventeen days away, will halve block rewards for miners from 6.25 to 3.125 BTC, potentially impacting mining companies. With BTC block rewards declining and the BTC hashrate consistently rising in recent years, the profitability of mining companies has steadily declined, necessitating greater capital efficiency to remain viable.
This dynamic forces mining companies to optimize capital efficiency and seek cheaper sources of electricity, leading to increasing use of renewable energy in BTC mining. BTC’s mining reward mechanism inherently delivers greater efficiency every step of the way, improving network security, reducing carbon emissions and promoting research into sustainable block confirmation methods.
Historically, BTC halvings have marked key points followed by 9-18 months of uptrend, culminating in cycle peaks. However, for the first time, BTC hit its all-time high ahead of the halving, signaling a departure from previous cycles. If historical patterns repeat, we could witness an upward trend for the remaining nine months of 2024, leading to an expected cycle peak between the fourth quarter of 2024 and the second quarter of 2025.