Bitcoin’s comeback has been hailed a “truly historical moment” for the asset, after it hurdled past AU$100,000 on Wednesday, following lows of $24,600 in the wake of the FTX collapse.
But the growth is not expected to halt, with research from Standard Chartered forecasting a potential US$100,000 valuation for bitcoin by the end of the year.
A number of events are believed to be propelling bitcoin’s steep rise, including the recent US spot bitcoin ETF approvals, which pushed it firmly into the mainstream, and renewed focus on the upcoming halving event.
Commenting on this week’s milestone, Jonathon Miller, Kraken’s managing director for Australia, said: “This is a truly historic moment for the asset and the crypto industry as a whole.”
What sets this rise in bitcoin apart from previous price surges is the influx of interest among mainstream financial institutions.
The SEC’s decision in January to approve the listing and trading of several spot bitcoin exchange-traded product shares made the asset more available and accessible to mainstream investors. And mainstream investors responded in hoards, pushing interest to record highs.
In Australia, the average daily volumes for local crypto ETFs expanded by some 800 per cent in the days after the SEC announcement, compared to the average daily volume over the past 12 months.
In a statement this week, BTC Markets’ Caroline Bowler said the integration of cryptocurrency into mainstream financial institutions is a crucial consideration for Aussie investors.
“The recent decision by the SEC is seen as a pivotal step, opening up bitcoin to retail and institutional investors,” said Bowler.
“Locally, it sets the stage for potential ASX listings of spot bitcoin ETFs, further integrating crypto assets into mainstream financial services. The lasting impacts of these developments are expected to unfold progressively over time, influencing cryptocurrency markets and investor participation.”
Earlier this week, InvestorDaily reported that VanEck believes it is “uniquely placed” to be the first to deliver an ASX-listed bitcoin ETF, though it culled expectations of a listing in the near-term while competitors have hinted at a launch as early as next quarter.
Presently, bitcoin ETFs are available on Cboe through the Global X 21Shares Bitcoin ETF and Global X 21Shares Ethereum ETF, which remain the only spot cryptocurrency ETFs in Australia.
However, the ASX has proven to be a harder listing to achieve, according to VanEck, which were among the firms in the US, alongside others like Fidelity and Grayscale, authorised to issue securities tethered to the movements of the cryptocurrency.
In Australia, VanEck said they have been engaged with bringing a spot bitcoin ETF to ASX since early 2021.
“We were the first fund manager to work with the regulator and exchange on the mechanics, and the first to formally lodge a submission for a bitcoin ETF to ASX,” Arian Neiron, chief executive and managing director, VanEck Asia-Pacific, said.
He confirmed the firm had resubmitted a bitcoin ETF application to the ASX last month, with plans to be the first to bring the offering to market.
Meanwhile, Brisbane-based Monochrome Asset Management filed an application in July 2023 and has indicated on its website a proposed launch in the second quarter of 2024, subject to regulatory approvals.
Bitcoin halving to move value higher
The upcoming bitcoin halving in April is being viewed as an additional positive indicator for the asset’s market dynamics.
Bitcoin halving refers to a once in a four-year event when the reward for mining the asset is cut in half to add an anti-inflationary economic element into its economy.
According to Bowler, the bitcoin halving typically impacts BTC price positively.
“The halving event occurs approximately every four years and involves a reduction in the rewards miners receive for validating transactions by half. This event is hard coded into bitcoin’s protocol and is designed to limit the total supply of bitcoin to 21 million,” she explained.
“The mechanism behind the positive impact on price lies in the reduced rate at which new bitcoins are created, leading to increased scarcity. With a diminished supply of new coins entering circulation, there is less selling pressure from miners. Historically, this scarcity has been associated with bullish market trends,” Bowler added.
Investors often anticipate the halving event, leading to increased demand as they expect the reduction in supply to drive up the value of existing bitcoins.
“The combination of decreased supply and heightened demand can contribute to upward price movements.”
Recent research from the Independent Reserve Cryptocurrency Index (IRCI) indicated that Australia’s awareness of crypto is now at a record high 95 per cent, with crypto ownership rates increasing to 28 per cent this year from 17 per cent in 2019.
