Bitcoin (BTC-USD), the world’s largest cryptocurrency, soared to a scorching 155.9% gain in 2023. Much of the gain was driven by excitement over the potential for the approval of spot Bitcoin ETFs in the United States, which have now launched. But with this catalyst in the rearview mirror, there are still plenty of reasons to believe that Bitcoin could continue to climb higher in the months ahead.
I’m bullish on the top digital asset based on the strong demand these ETFs have generated, the potential for spot Bitcoin ETFs in Hong Kong, and Bitcoin’s upcoming halving in April.
The Bitcoin ETFs Are a Hit
A lot of excitement about spot Bitcoin ETFs was already baked into the asset’s price, leading some to call their approval a “buy the rumor, sell the news” event. And to some extent, this was true, as Bitcoin’s price has declined since the ETFs launched.
But the ETFs look like a major hit based on demand so far, indicating strong interest in Bitcoin from both the general public and institutional investors alike. While money has flowed out of the Grayscale Bitcoin Trust (NYSEARCA:GBTC) (for a variety of reasons, including its higher fees and the end of its lockup period upon ETF conversion), lower-fee funds from big-name asset managers like BlackRock (NYSE:BLK), Fidelity, and ARK Invest are gaining serious traction.
BlackRock’s iShares Bitcoin Trust (NASDAQ:IBIT) has accrued over $2 billion in assets under management (AUM) within just a few short weeks of launching, while the Fidelity Wise Origin Bitcoin Trust (BATS:FBTC) is fast approaching the $2 billion mark as well after picking up $208 million in inflows on January 29 alone, single-handedly offsetting outflows from GBTC. These are huge numbers for ETFs that have existed for less than three full weeks.
The demand for these ETFs shows that Bitcoin is evolving into a mainstream financial asset. The continued success of these funds should lead to more buying support for Bitcoin as the funds add to their Bitcoin holdings.
Get Ready for Bitcoin ETFs in Hong Kong
Meanwhile, excitement about the potential for a similar rush for spot Bitcoin ETFs is brewing in Hong Kong, one of the world’s top financial centers.
Tencent News reports that The Harvest Fund, a major asset manager, has filed to launch a spot Bitcoin ETF with the Securities and Futures Commission (SFC), Hong Kong’s financial regulator. In December, the SFC announced it would start taking applications for these products, and it rolled out a list of requirements.
Harvest is hoping to get the green light for this ETF after China’s Lunar New Year. The filing could inspire a wave of additional filings, just like it did in the U.S.
Another firm, Venture Smart Financial Group (VSFG), has already unveiled its own plans to launch a spot Bitcoin ETF this quarter, with ambitions of growing to $500 million in AUM by the end of 2024.
Hong Kong news outlet Caixin has previously reported that up to 10 funds could try to launch spot Bitcoin ETFs in Hong Kong.
The launch of these spot Bitcoin ETFs in a major global financial hub (the Hong Kong Stock Exchange is the world’s sixth-largest stock market) could be another significant catalyst for Bitcoin, going forward.
The Halving Approaches
While spot Bitcoin ETFs have dominated the conversation, don’t forget that the Bitcoin halving is coming up in just a few short months. The next Bitcoin halving is anticipated to take place in April.
Bitcoin halving events take place every four years. During this time, the reward that Bitcoin miners receive for producing, or “mining”, a new block of Bitcoin is cut in half, hence the name. Bitcoin miners like Marathon Digital (NYSE:MARA), Riot Platforms (NASDAQ:RIOT), and Bitdeer (NASDAQ:BTDR) currently receive 6.25 new Bitcoins for each block they produce, but after the halving, this incentive will be reduced to 3.125 BTC.
The halving slows down Bitcoin’s inflation rate and makes Bitcoin more scarce over time, which should, in turn, increase its value.
Past performance is, of course, no guarantee of future results, but the previous halvings have often preceded significant moves to the upside. During years in which halvings have previously occured, Bitcoin’s price has increased by an average of 128%.
Based on these results, it’s easy to get excited about the upcoming halving.
Plenty of Reasons to Remain Bullish
The rampant speculation about the approval of spot Bitcoin ETFs that drove prices higher is now in the rearview mirror, but there are plenty of catalysts moving forward and plenty of reasons to remain bullish. I’m bullish on Bitcoin and believe it can continue to move higher over the next few months based on the early success and demand for the new spot Bitcoin ETFs, the potential for the approval of a new slate of spot Bitcoin ETFs in Hong Kong, one of the world’s most active financial markets, and the upcoming halving in April, which has historically been a positive catalyst for Bitcoin prices.