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Market expects Bitcoin halving in 2024 to drive long-term value

INVESTINGMarket expects Bitcoin halving in 2024 to drive long-term value

Bitcoin weakened, contrary to expectations, as the American SEC was almost forced to capitulate after months of battles and approved the establishment of the first ETF funds based on the bitcoin spot market.

The SEC approved 14 bitcoin-based ETF funds. Notably, this includes giants in the asset management market such as Blackrock, Invesco, Fidelity and Valkyrie. At the same time, the head of the SEC, or the Securities and Exchange Commission of the US, indicated that this is not an endorsement of bitcoin and the cryptocurrency market. The SEC statement indicates that investors should exercise extra caution due to the high volatility of cryptocurrencies and the involvement of dirty money in the market.

This decision has long been anticipated, and it is clear that the cryptocurrency market continues to do well without any clear profit-taking. Investors focused on other cryptocurrencies hope that the SEC decision will pave the way for funds on other cryptocurrencies.

Now, a far wider audience of investors will have access to the cryptocurrency market, but this does not imply that bitcoin has become a safe investment, as is clearly emphasized by the SEC.

“With the SEC’s decision, there were hopes for an increase in bitcoin’s valuation because these funds buy bitcoin in the market,” says Michał Stajniak, XTB expert, in a conversation with MarketNews24. “However, the market reacted differently because we have one particularly large ETF fund which was a so-called trust and which was only available to institutional investors before. This trust had very high charges and was trading below its asset value. When these losses were recovered, we saw a sell-off from this fund that is causing significant sell-offs which other ETFs cannot keep up with in the market.”

The enthusiasm after the SEC decision lasted a short while, and the effect in the days following was that there was no net increase in demand in the market. Hence the disappointment, as it was expected that the price of bitcoin would approach $50,000. The response, however, was a short-lived dip to even below $40,000.

“The situation is different from twenty years ago when gold ETFs were introduced,” adds M.Stajniak.

A few percent decrease in Bitcoin’s value within a month is relatively small when considering the cryptocurrency market.

Cryptocurrencies have been eagerly awaiting 2024, also due to the bitcoin halving, which happens every four years. What is the halving that investors are waiting for? It’s a reduction in the supply of bitcoin for mining. Every four years, the amount of bitcoin received is halved. This is to prevent bitcoin from being mined too quickly and to increase its value over time. The last three halvings have led to spectacular increases in cryptocurrency value. This situation can be compared to changes in gold prices when their mining decreases.

“For the next few weeks, we may still observe stagnation, but investors are likely to soon start positioning for the halving, especially given the currently weak valuation of this cryptocurrency,” comments the XTB expert.

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