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Bitcoin’s Emergence on Mainstream Platforms
I’ll start by saying that I recently noticed something on Finviz, a website I often use to find information about American companies traded on U.S. stock exchanges. There is a section on futures that displays the main assets traded on the U.S. market. I don’t know exactly when this happened, but just recently noticed it. Bitcoin appeared in the lower right corner of the currency section. Along with the dollar, euro, British pound, Australian dollar, Swiss franc, and Japanese yen. About 15 years ago, we didn’t even know it existed. Now, it stands alongside currencies with a history of hundreds of years, some of them even more.
Source: Finviz
Bitcoin’s Strong Upward Trend
I’m also sharing the dynamics of Bitcoin over the past two years. In fact, it has grown steadily, with only minor corrections. Nevertheless, the pronounced upward trend is attracting attention. It is not only private investors who are investing in Bitcoin, but also large ETF funds and even global central banks. For example, Kazakhstan is contemplating investing some of its gold and foreign exchange reserves in Bitcoin.
Source: TradingView
Institutional Investment In Bitcoin
While Kazakhstan is considering this, there are already funds that actively invest in Bitcoin. For example, there is the iBit fund (ticker symbol IBIT.US). This is an ETF fund from BlackRock that allows you to access Bitcoin by purchasing standard shares that are traded on the exchange, helping to eliminate the operational, tax, and depository complexities associated with storage and so on. This fund is also quite liquid. At the moment, the fund has $83 billion in bitcoins. $83 billion- it isn’t some jokes now; It is serious money.
And, of course, I don’t think I need to tell about BlackRock. It is the world’s largest asset management company. They have a partnership with Coinbase, where they store the bitcoins they buy for this ETF fund. So everything is liquid, everything is reliable, everything is great here.
Halving Mechanism
Let’s also take a brief look at a term called “halving.” Halving, simply, is a reduction by half. It is a twofold decrease in the size of the reward given to miners for adding a new block to the blockchain. As you know, Bitcoin consists of certain blocks that are developed by software and calculated using mining. In other words, miners (people) provide their computing power to solve the tasks set by Bitcoin and receive a reward for this.
And once every four years, halving occurs, which is a reduction of this reward by exactly half. The first halving took place in 2012, the second- 2016, the third- 2020, and the fourth- 2024. That is, every four years. Every four years, the reward for mining a bitcoin is halved. The main purpose of this halving is to limit the currency’s emission and prevent inflation, well, if we compare it to conventional money.
The Gold Comparison
Disclosure: 82% of retail CFD accounts lose money
For quite some time now, Bitcoin has been compared to gold because, like gold, its issuance is limited and its extraction becomes more difficult with each subsequent gram. In other words, there is less and less gold on Earth, and Bitcoin is following a similar path.
So, at the moment of halving, interest in Bitcoin mining naturally declines to some extent. But everything has been thought out in this network. When the number of miners decreases, the speed of transaction processing also decreases. Therefore, this balances out, creating a kind of pendulum effect. In theory, nothing should happen on the market at the moment of halving.
Historical Impact of Halvings
However, according to statistics, the first three halvings affected Bitcoin’s dynamics. For example, after the first halving, Bitcoin’s value dropped threefold, and after the second, it dropped fivefold. Initially, it grows very strongly, but after 18 months, the opposite effect occurs and it enters a correction phase. This correction phase can last up to a year or a year and a half.
And so, here we are. The last halving took place in April 2024. According to statistics, a correction in the Bitcoin market should begin somewhere in September.
Future Outlook
As I mentioned earlier, we can already see Bitcoin on the main page of the Finviz website. There are serious discussions about investments in Bitcoin by global central banks. We also see price forecasts. For example, the British bank – Standard Chartered – forecasts Bitcoin reaching $200,000 by the end of the year. Currently, this seems slightly overestimated, but it may be achievable, especially given further cuts to key interest rates and relatively high inflation compared to previous years.
This cycle of cryptocurrency decline may be a thing of the past. As mentioned earlier, Bitcoin is entering ETF funds. In the second quarter alone, ETF funds bought 245,000 Bitcoins.
Source: farside
Growing Demand and Interest
Here are the American ETF funds for Bitcoin, which are experiencing corresponding inflow and outflow dynamics. Given the high volume of investments flowing into Bitcoin, the expected correction in September may not occur. Therefore, colleagues, keep a close eye on this asset. Demand for it is increasing, and more and more clients are asking us about it and expressing interest in investing in Bitcoin.
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