Bitcoin's price kicked off the year surpassing the $45,000 mark for the first time since April 2022, and there is optimism surrounding the future of the crypto ecosystem for 2024 for several reasons, primarily linked to the currency's own operation and the likely approval of exchange-traded bitcoin spot funds.
On Tuesday, the cryptocurrency almost touched $46,000, reaching $45,890.95 at 4:06 am ET, before paring its gains. Bitcoin's price is still far from the $69,000 it reached in November 2021, its historic maximum, but it has recovered quite well from its cycle-low of $16,000 in 2022.
The recent rise in this highly volatile digital asset seems connected to the widespread expectation that the Securities and Exchange Commission will greenlight proposals from BlackRock, Fidelity, and other entities to introduce Bitcoin ETFs within the upcoming weeks.
In 2023, Bitcoin experienced a price surge of over 150%, with the bullish trend gaining momentum notably in the last quarter as the anticipated approval for ETFs neared.
This ascent coincided with the imminent halving, a scheduled event in the cryptocurrency realm, involving a 50% reduction in the issuance of new coins. This cut fosters scarcity in the market, commonly leading to an increase in its price.
The positive trend in Bitcoin's price might provide a sense of relief to Latino cryptocurrency holders affected by the decline in all such assets since November 2021, when the period known as "crypto winter" started.
Latin American countries and the U.S. stand out for their widespread adoption of cryptocurrency, as revealed by a study conducted by Chainalysis. Various reasons contribute to this trend, including the use of cryptocurrency for sending remittances and its role in store-of-value transactions.
In recent years, several Latin American countries have started to acknowledge the opportunities presented by Bitcoin. The government policy implemented by Nayib Bukele in El Salvador is the most prominent example, and potential use cases are also beginning to emerge in Argentina and Colombia.
Projections regarding the future of Bitcoin vary depending on the source. While Bitcoin advocates and certain exchanges, such as Bitget, envision the currency more than doubling its current value to surpass the $100,000 mark, other experts, including Peter Schiff, express concerns.
Be careful what you wish for. The promise of a U.S. listed spot #BitcoinETF has been supporting the #Bitcoin price and speculative demand for years. Once the ETFs are launched and the highly anticipated institutional and other new investor demand does not show up, look out below!
— Peter Schiff (@PeterSchiff) January 2, 2024
According to Schiff's stance, Bitcoin's price uptrend was driven by speculative optimism about the launch of this Bitcoin ETF, in a bubble that could quickly burst, causing the price of Bitcoin to collapse if the expected investments in these assets do not materialize.
Bitcoin's Price 2024: What Are the ETFs?
Exchange Traded Funds (ETFs) are financial products that emerged in the United States in the early 2000s. They are defined as traded and indexed investment funds, meaning they track a stock index, and their profitability depends on that index.
While ETFs on Bitcoin futures have been available for a few years, none have been based on its spot price or real-time settlement, unlike other assets such as gold or oil.
In recent years, the SEC has consistently rejected requests for Bitcoin spot ETFs, citing concerns about market manipulation. However, there is a growing indication that regulators may approve some of the 13 proposed ETFs in the coming months, with a decision anticipated in early January.
Bitcoin's Price 2024: What to Expect with the Halving?
The Bitcoin halving, which takes place every four years, plays a crucial role in regulating the issuance of new BTC coins. By halving miner rewards, it curtails the pace at which new Bitcoins enter circulation, fostering scarcity and historically contributing to the appreciation of BTC's value.
It is not the only effect on the crypto ecosystem according Btiget's report. "The impending halving is perceived as a catalyst that not only impacts the supply dynamics but also influences market sentiment. It embodies a significant moment within the Bitcoin ecosystem, with participants closely monitoring its occurrence and its potential effects on the broader market. The anticipation and buildup surrounding the halving often cultivate an atmosphere of speculation and heightened interest among traders and investors, contributing to an optimistic narrative regarding BTC's future value."
Joel Vainstein, co-founder of the Chilean exchange Orionx, emphasizes the importance for investors to comprehend the market's high volatility and its cycles every four years. "It is advised to strategically position oneself before key events such as the halving to maximize potential benefits," he indicated in a report for 2024 shared with The Latin Times.
"While the future holds promise, investors should approach the market with a well-thought-out strategy, taking into account both opportunities and inherent risks. Continuous education and research are crucial for successfully navigating this dynamic and exciting market," Orionx communicated.
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