For a time, it seemed as though the crypto winter signaled the beginning of the end of cryptocurrencies.
After gaining the attention of the public, record breaking price runs were countered with significant valuation drops, highlighting the volatility of decentralised assets and bringing into question its future.
Just three months into 2024, this narrative has been reversed with BTC hitting record breaking highs and a surge of institutional interest in listed BTC ETFs.
Head of Technology PR at The PHA Group, Rhys Merrett, noted the broader impact such trends are having on general market sentiment towards crypto.
“The decision by the SEC to approve BTC ETFs was always going to have an impact on the asset’s price. By opening a new way for institutional investors and the wider retail market to access crypto investment, a rally of sorts was to be expected. However, few could have expected such an event to catalyze a wider bull run across the major cryptocurrencies.”
“Applying the rules of trading and investment, one would expect the price of BTC to effectively cool off, with the price consolidating at a consistent trading point. Just where this point will be is difficult to tell. However, such a price consolidation would allow investors to take a step back and assess how the BTC is likely to perform over the medium to long term.
“The problem of such an analysis, however, is that we are approaching BTC through a traditional finance lens. Cryptocurrencies are not regulated and volatile. Like we have seen in the past, any sudden hike in price can be met with a rapid decline, often without any clear reasoning. This reflects the inherent risk of such assets. Over the last few days, the BTC price has started to drop, but it is too early to tell whether this is part of a bigger trend.”
Rhys Merrett acknowledges there are also other factors at play which could catalyse further price volatility.
Merrett said, “On 17 April, we are likely to see BTC halving take place. Occurring about once every four years, mining rewards are reduced by half, reducing the rate new Bitcoins are introduced circulation.
“In the past, when a halving event has occurred, we have seen the price of BTC rise. With so much public attention on BTC at the moment, it is not known what impact the upcoming halving will have.”
For now, all attention will be on the BTC price as the halving date approaches.
