Key Points
- Bitcoin’s supply is increasingly being locked into spot exchange-traded funds, creating a scarcity in the broader market.
- Bitcoin’s market peak is forecasted to be between November 2024 and February 2025.
Bitcoin [BTC] has proven its dominance in the crypto market once again. After nearly a month of consolidation and sideways movement, the market leader hit a new record high, surpassing $80K.
The cryptocurrency’s value increased by over 5% in 24 hours and over 18% in the last seven days. This surge in Bitcoin’s value is part of a general market bullishness, particularly after the SEC’s approval of spot Bitcoin exchange-trader funds (ETFs) back in January.
Bitcoin ETFs and Market Growth
Nearly $26 billion worth of BTCs have been invested into these funds since their listing. Inflows have also significantly increased following an initial outflow from the Grayscale Bitcoin Trust (GBTC). At the time of writing, the assets under management (AUMs) for Bitcoin spot ETFs was almost $79 billion, accounting for 5.21% of Bitcoin’s total supply.
There are also external factors that may be contributing to Bitcoin’s performance. Inflation has significantly decreased in recent months and the job market has improved. As a result, the U.S. Federal Reserve has maintained a relatively dovish approach, keeping interest rates steady during the last FOMC meeting. This has led to an increase in spending on risk-on assets like equities and cryptocurrencies.
Bitcoin’s Increasing Scarcity
The increasing number of Bitcoins being locked into spot ETFs has created a scarcity in the broader market. Consequently, the supply of Bitcoins on exchanges has continued to decline. At the time of writing, about 9% of Bitcoin’s total circulating supply was held on exchanges, down from almost 12% at the start of 2024.
While supply was shrinking, demand remained strong. Unlike previous bull cycles, the 2024 Bitcoin rally was driven by both retail and institutional interest. This combination of decreasing supply and increasing demand could potentially push Bitcoin to historic highs this cycle.
Noted technical analyst Ali Martinez had earlier predicted that the market peak would be hit sometime between November 2024 and February 2025. Therefore, the current $80K value may just be the starting point for Bitcoin’s continued growth.
