Bitcoin’s price movements have started to reflect its increasing scarcity, and recent data underscores the trend. A significant portion of Bitcoin’s available supply is being held by long-term investors, indicating a bullish outlook for the cryptocurrency. Since mid-2021, long-term Bitcoin holders have ramped up their exposure to the asset, holding firm even during the bear market. The resilience of these holders has resulted in a record 80% of Bitcoin supply being controlled by long-term investors as of October. This high level of ownership has coincided with a price rally, pushing Bitcoin to over $35,000. Additional data suggests a significant accumulation phase around the $25k-$31k range, demonstrating the strong long-term bullish sentiment among these investors. Over the past month, Bitcoin has posted more than 25% gains, pushing the price higher and breaking records set back in 2015.
The upcoming Bitcoin halving event is poised to further reduce the asset’s inflation rate, making Bitcoin even more scarce. This factor is also expected to contribute to price growth, aligning with the positive sentiment surrounding the asset. Investment banking giant Morgan Stanley echoed this optimism in a recent report, predicting that the halving will ignite a new bull run.
Spot Bitcoin ETF and Institutional Demand
The latest rally in Bitcoin’s price has been largely driven by renewed optimism surrounding the approval of a spot Bitcoin exchange-traded fund (ETF) in the United States. While the U.S. Securities and Exchange Commission (SEC) has yet to approve any spot Bitcoin ETFs, several major financial firms, including Grayscale Investments, ARK Investment, BlackRock, and Fidelity, have submitted applications for approval. Experts predict that approval is likely by early 2024, which could trigger a buying spree among investors.
Institutional investors have shown strong interest in Bitcoin, but they have held off from entering the market until a spot Bitcoin ETF is approved. Paul Brody, global blockchain leader at Ernst & Young (EY), noted in a recent CNBC segment that trillions of dollars are waiting to be invested in Bitcoin once a spot ETF receives regulatory approval. This pent-up demand could significantly influence the price of Bitcoin once these funds begin to flow into the market.
The Impact of Scarcity and Halving on Bitcoin’s Future
Bitcoin’s increasing scarcity, coupled with the upcoming halving, positions the cryptocurrency for continued growth. Long-term holders have demonstrated unwavering confidence in Bitcoin’s future, and the potential approval of a spot Bitcoin ETF could further catalyze the asset’s price. As more institutional investors prepare to enter the market, Bitcoin’s journey toward becoming a more widely adopted asset could be accelerated, leading to substantial price appreciation.
The combination of long-term investor behavior, the scarcity driven by the halving event, and the growing institutional interest positions Bitcoin for a promising future. Investors and analysts alike are closely monitoring these developments, as they could unlock significant value for the cryptocurrency in the coming months.
