A recent study by Canaccord Genuity suggests that Bitcoin‘s over 60% surge in the first quarter is attributed to factors such as the approval of spot exchange-traded funds in the US and the forthcoming fourth block reward halving. The report also cites a growing willingness to take risks in financial markets as a contributing element. It anticipates ongoing positive trends in the cryptocurrency market, driven by these developments.
Anticipating the Halving’s Market Boost
The Canaccord Genuity team, under the leadership of Michael Graham, acknowledges the uncertainty of the macroeconomic landscape. However, they emphasize the potential impact of the approaching block reward halving, which historically coincides with a tightening Bitcoin supply and a subsequent price increase. The halving event is expected to happen in April and is seen as a catalyst for a sustained bullish trend.
Examining historical trends, the report predicts a stronger period of market gains for Bitcoin post-halving, based on price rallies observed after previous such events. The halving reduces miner rewards by half, constricting the rate at which new Bitcoin enters circulation.
Spot Bitcoin ETFs’ Role in Market Dynamics
The brokerage firm expresses a positive outlook on the SEC’s approval of 11 spot Bitcoin ETFs, viewing it as a significant factor in Bitcoin’s continued price rise. The report highlights the inflow of capital into spot ETFs as a key driver of Bitcoin’s value and anticipates this trend to persist as individual investors increasingly incorporate Bitcoin into their tax-advantaged accounts, such as IRAs.
Despite the outperformance of Bitcoin’s price relative to the inflows into ETFs, the momentum is expected to be sustained. The report also comments on the underperformance of public Bitcoin mining companies compared to Bitcoin’s market performance, suggesting that the divergence may be due to uncertainties about miners’ profitability and the introduction of spot ETFs as an alternative investment vehicle.
