In a notable increase, the price of bitcoin exceeded $60,000 this week, further capturing the attention of financial markets. Our country is not far behind: bitcoin represented 40% of cryptocurrency purchases through Bitso during the second half of 2023 and occupied 53% of the composition of Mexican wallets on the platform.
The 3 factors behind the increase in the price of bitcoin
This important milestone, which bitcoin reaches for the first time since December 2021, comes against the backdrop of three fundamental factors shaping the cryptocurrency landscape:
1) The halving 2024
This is a pre-scheduled event that occurs every 210,000 mined blocks (approximately every four years), which is expected again in April of this year and that reduces by half the bitcoin rewards that miners receive for verifying transactions.
This drawdown was designed from the inception of bitcoin to protect its value and ensure its scarcity over time, replicating the limited supply of precious metals like gold.
2) The approval of the bitcoin exchange-traded fund (ETF)
This has injected enthusiasm into the marketbut it also validates the intrinsic value of bitcoin as a solid asset comparable to silver and gold.
In this sense, the market capitalization of the bitcoin ETF (over $39 billion) has already surpassed that of the silver ETF (over $12 billion) and is only below the gold ETF (around 97 billion dollars in the United States).
This instrument also offers a traditional avenue for institutional investors to participate in the growth of bitcoin and strengthens the long-term perspective of the asset and its surrounding industries.
3) Bitcoin price cycles
These have shown a behavior consistent with periods of sustained growth and during which they have reached their historical maximums and then leveled off once they were completed.
The highest price was 68 thousand dollars in November 2021, which was coming from 7 thousand dollars at the time of the cycle we are in today.
These cycles have always started with the halving.
The importance of halving 2024
We are at an exciting time in Bitcoin’s history thanks to the halving and its exposure to traditional markets through ETFs. The halving is important since the markets are governed by the behavior of supply and demand and the Bitcoin market, like the gold market, is composed of these forces.
There are two types of offers, the secondary offer, made up of BTC bought and sold, and the primary offer made up of the BTC mined and sold, which will be halved around April 18, 2024.
This comes with the fact that Bitcoin has proven its ability as a store of value and technology, time and time again over the past few years. In recent months we have seen more people and institutions acting in accordance with this reality.
Andres Salcedo Andrés Salcedo leads and drives Bitso’s crypto strategy as Head of Crypto. His experience spans private equity, venture capital and corporate finance industries throughout Latin America.