Mateo Greco, Research Analyst, Listed Digital Assets and FinTech Investment Business Finekia International
Bitcoin (BTC) ended March at around $71,300, up 16.6% from the previous month’s closing price of around $61,150. This monthly surge represents a historic milestone for BTC's price trend. In March, the price of BTC increased for 7 consecutive months, the first time since its inception.
The sustained price increase began in Q4 2023 as market participants expected the BTC Spot ETF to likely be approved in January. Following this expectation, the BTC Spot ETF was actually approved in early January 2024. Throughout the first quarter, BTC soared from $42,300 at the beginning of the year to around $71,300, reflecting a 64.7% increase in price. However, during the first few days of April, BTC witnessed a decline, with the price hovering around $66,500 at the time of writing.
The recent price increase has been primarily driven by demand for the BTC Spot ETF, which has accumulated over $12 billion in net inflows since its inception. Last week, the BTC Spot ETF had approximately $850 million in net inflows, followed by $85 million in outflows on April 1st and $40 million inflows on April 2nd.
While overall net inflows into BTC Spot ETFs remain strong, there is also evidence of sustained demand decline and some profit taking, slowing the pace of cumulative inflows compared to the previous month. This is to be expected given that the majority of BTC spot ETF investors have already taken profits, given that BTC was priced between $40,000 and $45,000 at the start.
The next BTC halving event, currently scheduled for April 20th, just 17 days away, will see miners' block rewards halved from 6.25 BTC to 3.125 BTC, potentially impacting mining companies. Over the past few years, as BTC block rewards have decreased and BTC hashrate has consistently increased, mining farm profitability has been steadily declining and capital efficiency improvements are needed to survive.
This dynamic forces mining companies to optimize capital efficiency and seek cheaper power sources, leading to increased use of renewable energy in BTC mining. The BTC mining reward mechanism inherently improves the efficiency of each step, strengthens network security, reduces carbon emissions, and fosters research into sustainable block confirmation methods.
Historically, BTC halving events mark key points, followed by a 9-18 month uptrend that reaches the peak of the cycle. However, BTC reached an all-time high for the first time in anticipation of the halving, marking a departure from previous cycles. If historical patterns repeat, we would see an upward trend for the remaining nine months of 2024, with the cycle peaking between Q4 2024 and Q2 2025.
Source: the-blockchain.com
