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Bitcoin Rocket Fuel: 3 Catalysts to Propel it Higher into Year End
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Bitcoin has risen from the abyss thus far in 2023. Despite the FTX exchange blow-up and a weakening economy, Bitcoin is up more than 75% year-to-date. Though many concerns exist, three major catalysts are likely to propel prices higher into the end of the year, including:
Regulatory Clarity
Earlier this month, Coinbase Global ((COIN - Free Report) ) shares plummeted by more than 20% over two days after the SEC sued the firm.
Image Source: Zacks Investment Research
The SEC complaint alleges that the exchange is running an unregistered exchange. Despite the negative news, COIN shares have recovered all their losses.
Why it’s Important
Though the SEC crackdown has caused turbulence in the short-run for COIN shares, it will provide regulatory clarity in the long-run. The SEC has kicked the can down the road for years and has provided little clarity. Whichever way the lawsuit goes, the result will be that the SEC will need to provide clarity. While the outcome may not be favorable for the altcoins that are under scrutiny, it is likely to be bullish for Bitcoin.
Institutional Entrants
Bitcoin enthusiasts and the crypto community have long celebrated the fact that crypto is a way of fighting back against the system – a rebellion, if you will. For years, institutional investors have largely shunned the space amid uncertainty about the asset class and the regulatory framework surrounding it. However, the tide seems to be turning finally, and big well-known institutions want their piece of the action. Earlier this week, a Charles Schwab ((SCHW - Free Report) ) and Fidelity – backed crypto exchange named EDX added more backers. Meanwhile, BlackRock, the largest asset manager in the world ($12 trillion in assets), filed regulatory papers for a Bitcoin ETF.
Why it’s Important
Because institutional firms have deep pockets, respected research teams, and big reputations, their entry into the space provides a certain amount of legitimacy. Furthermore, if BlackRock’s ETF is pushed through the regulatory process and brought to market, it will drastically increase access for those who solely have traditional brokerage accounts. Though several Bitcoin ETFs have failed to pass regulatory hurdles, BlackRock’s record of getting ETFs approved by the SEC is 575 to 1 – I like those odds.
Yesterday, Bitcoin and Bitcoin proxies such as the ProShares Bitcoin ETF ((BITO - Free Report) ) and the Grayscale Bitcoin Trust ((GBTC - Free Report) ) soared on the news while volume spiked. BITO broke a nine-week downtrend while volume picked up by 64%.
Image Source: Zacks Investment Research
Bitcoin Halving
The Bitcoin halving is a highly watched event that occurs approximately every four years in the Bitcoin Network. It is a pre-programmed piece of code written into the Bitcoin protocol that reduces the rate at which new Bitcoins are created and introduced into circulation.
How it Works
Bitcoin runs on a decentralized blockchain maintained by a network of computers known as miners. Miners perform complex mathematical equations to validate, secure, and record transactions on the blockchain. In exchange, the miners are rewarded with newly created Bitcoins as compensation for their work.
For example, at Bitcoin’s inception in 2009, miners received a reward of 50 Bitcoins per block. During the first halving in 2012, the reward per block dropped in half from 50 to 25 Bitcoin. Subsequent halvings occurred in 2016 and 2020, and the current reward stands at 6.25 BTC per block.
Why it’s Important
Whether an investor looks at Bitcoin as money, a store of value, or simply an investment, the halving has broad implications. Because Bitcoin has a built-in monetary policy and a limited supply, it is dramatically different than any other central bank–based currency in the world. Furthermore, though the halving is a known event, each occurrence has led to dramatic rallies. The green arrows on the chart below show where halvings have occurred.
Image Source: TradingView
The next halving event is likely to occur in early 2024.
Putting the Pieces Together
Bitcoin has three significant catalysts in the mid-term – regulatory clarity, institutional adoption, and the halving. Though Coinbase is showing resilience, the company will likely be tangled up in regulatory battles over the next few months. That said, the catalysts above bode well for Bitcoin proxies such as MicroStrategy ((MSTR - Free Report) ). Furthermore, crypto miners, such as Riot Platforms ((RIOT - Free Report) ), Applied Digital ((APLD - Free Report) ), Marathon Digital ((MARA - Free Report) ), and Hut Mining ((HUT - Free Report) ), should benefit the most if Bitcoin is to continue moving higher.
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Bitcoin Rocket Fuel: 3 Catalysts to Propel it Higher into Year End
Bitcoin has risen from the abyss thus far in 2023. Despite the FTX exchange blow-up and a weakening economy, Bitcoin is up more than 75% year-to-date. Though many concerns exist, three major catalysts are likely to propel prices higher into the end of the year, including:
Regulatory Clarity
Earlier this month, Coinbase Global ((COIN - Free Report) ) shares plummeted by more than 20% over two days after the SEC sued the firm.
Image Source: Zacks Investment Research
The SEC complaint alleges that the exchange is running an unregistered exchange. Despite the negative news, COIN shares have recovered all their losses.
Why it’s Important
Though the SEC crackdown has caused turbulence in the short-run for COIN shares, it will provide regulatory clarity in the long-run. The SEC has kicked the can down the road for years and has provided little clarity. Whichever way the lawsuit goes, the result will be that the SEC will need to provide clarity. While the outcome may not be favorable for the altcoins that are under scrutiny, it is likely to be bullish for Bitcoin.
Institutional Entrants
Bitcoin enthusiasts and the crypto community have long celebrated the fact that crypto is a way of fighting back against the system – a rebellion, if you will. For years, institutional investors have largely shunned the space amid uncertainty about the asset class and the regulatory framework surrounding it. However, the tide seems to be turning finally, and big well-known institutions want their piece of the action. Earlier this week, a Charles Schwab ((SCHW - Free Report) ) and Fidelity – backed crypto exchange named EDX added more backers. Meanwhile, BlackRock, the largest asset manager in the world ($12 trillion in assets), filed regulatory papers for a Bitcoin ETF.
Why it’s Important
Because institutional firms have deep pockets, respected research teams, and big reputations, their entry into the space provides a certain amount of legitimacy. Furthermore, if BlackRock’s ETF is pushed through the regulatory process and brought to market, it will drastically increase access for those who solely have traditional brokerage accounts. Though several Bitcoin ETFs have failed to pass regulatory hurdles, BlackRock’s record of getting ETFs approved by the SEC is 575 to 1 – I like those odds.
Yesterday, Bitcoin and Bitcoin proxies such as the ProShares Bitcoin ETF ((BITO - Free Report) ) and the Grayscale Bitcoin Trust ((GBTC - Free Report) ) soared on the news while volume spiked. BITO broke a nine-week downtrend while volume picked up by 64%.
Image Source: Zacks Investment Research
Bitcoin Halving
The Bitcoin halving is a highly watched event that occurs approximately every four years in the Bitcoin Network. It is a pre-programmed piece of code written into the Bitcoin protocol that reduces the rate at which new Bitcoins are created and introduced into circulation.
How it Works
Bitcoin runs on a decentralized blockchain maintained by a network of computers known as miners. Miners perform complex mathematical equations to validate, secure, and record transactions on the blockchain. In exchange, the miners are rewarded with newly created Bitcoins as compensation for their work.
For example, at Bitcoin’s inception in 2009, miners received a reward of 50 Bitcoins per block. During the first halving in 2012, the reward per block dropped in half from 50 to 25 Bitcoin. Subsequent halvings occurred in 2016 and 2020, and the current reward stands at 6.25 BTC per block.
Why it’s Important
Whether an investor looks at Bitcoin as money, a store of value, or simply an investment, the halving has broad implications. Because Bitcoin has a built-in monetary policy and a limited supply, it is dramatically different than any other central bank–based currency in the world. Furthermore, though the halving is a known event, each occurrence has led to dramatic rallies. The green arrows on the chart below show where halvings have occurred.
Image Source: TradingView
The next halving event is likely to occur in early 2024.
Putting the Pieces Together
Bitcoin has three significant catalysts in the mid-term – regulatory clarity, institutional adoption, and the halving. Though Coinbase is showing resilience, the company will likely be tangled up in regulatory battles over the next few months. That said, the catalysts above bode well for Bitcoin proxies such as MicroStrategy ((MSTR - Free Report) ). Furthermore, crypto miners, such as Riot Platforms ((RIOT - Free Report) ), Applied Digital ((APLD - Free Report) ), Marathon Digital ((MARA - Free Report) ), and Hut Mining ((HUT - Free Report) ), should benefit the most if Bitcoin is to continue moving higher.