Bitcoin BTC investors and crypto investors more broadly have become accustomed to volatility, and 2024 is proving to be a year in which that trend will further intensify. With the approval of a Spot Bitcoin ETF, the potential for a subsequent Spot Ether ETF, and increased regulatory clarity in the form of FASB guidance, it's surprising that sentiment towards Bitcoin and crypto assets continues to improve. It's not something you should do. That said, the impact of spot ETF approval on price levels needs to be revised, as even some of the more optimistic forecasts continue to see price levels rise rapidly.
Experienced investors are looking to move forward as price levels reach highs not seen since the previous peak in 2021, trading volumes crash the services of exchanges such as Coinbase, and institutional buying continues to rise. It would be best for households to think back to the bull market of the past. While prices haven't broken past all-time highs, every bull market is different. Investors of all sizes need to be aware of how these price increases differ from past bull markets.
Let's take a look at some of the trends and reasons why this bull market is different.
Institutional investor purchases are driving price increases
A common theme in rapid price increases for all types of assets is that dramatic increases in prices tend to be driven by individuals or retail investors. While this trend is consistent from a historical and asset-wide perspective, the recent rise in Bitcoin prices is also driven by additional factors. With the approval of Spot ETFs, institutional interest and demand for Bitcoin now has a viable way to purchase and make these assets available to customers and clients.
To put this in perspective, spot ETF options have acquired approximately 10x the number of Bitcoins being mined over the same period, and this is due to institutional demand and trading volume through these various spot ETF products. is clearly shown. Furthermore, approximately 80% of the total supply of Bitcoin has not moved in the past six months, creating strong demand for Bitcoin despite the limited newly available supply.
Bitcoin will be used for retirement funds
Another reason why Bitcoin prices have been steadily rising since the approval and launch of spot ETF products is that these products may now be available for purchase by financial advisors and retirement funds. Prior to this approval, the process for investors to purchase Bitcoin and other crypto assets and hold them in retirement accounts was relatively complex, with most options involving setting up a self-directed IRA or product. This was similarly foreign to most mainstream investors.
Benefiting from the approval and legitimacy that ETF products have brought, it seems only a matter of time before retirement funds and various advisors start recommending these products to their clients. In particular, the news that Morgan Stanley MS is valuing a spot Bitcoin ETF for clients of broker-dealer platforms that make up $150 billion in assets under management at financial institutions illustrates the reality of this trend. It seems so. Following a similar opportunity with Morgan Stanley, the potential launch of a registered investment advisor (RIA) network could serve as part of the next steps for Bitcoin and the broader crypto asset market.
With renewed institutional buying and the possibility of further interest, bid prices for Bitcoin and other crypto assets will continue to rise for the foreseeable future.
Regulatory clarity continues to drive investment
While not as exciting as the potential for ETF launches, price increases, and further buying by institutional investors, the reality is that getting clearer and more understandable rules around crypto assets is essential to driving these actions. is. Over the past year or so, there has been significant movement to address some fundamental obstacles to larger and more consistent purchases of Bitcoin and crypto assets.
Specifically, this accounting ruling clarifies how organizations should account for and report their crypto asset holdings on both the balance sheet and income statement, improving transparency and comparability of results. Masu. The SEC's efforts to litigate and enforce the entire field appeared to be suppressing investment, but it has suffered setbacks in court and in Congressional hearings, curbing editorial regulatory ambitions. . Finally, even the IRS aims to clarify certain tax points and make it easier for investors of all sizes to come forward if they need to address past issues. All of these changes are combining to make the appeal of cryptocurrencies clearer and bring tangible benefits to companies seeking investment.
Bitcoin continues to soar in 2024, and there are several factors that make these movements different from similar movements in the past. Investors should be careful.
follow me twitter Or LinkedIn. check out Some of my other works are also here.
