A recent study conducted by Canaccord Genuity has indicated that Bitcoin experienced an impressive surge of over 60% in the first quarter of the year. This surge can be attributed to several factors, including the approval of spot exchange-traded funds in the US and the upcoming fourth block reward halving. Additionally, there is a notable increase in risk tolerance observed in financial markets, further contributing to Bitcoin's rise. The study predicts continued positive trends in the cryptocurrency market due to these significant developments.
Anticipating Market Growth Post-Halving
Canaccord Genuity, led by Michael Graham, recognizes the uncertainties in the current macroeconomic environment. However, they emphasize the potential impact of the upcoming block reward halving, historically linked to a decrease in Bitcoin supply and subsequent price appreciation. This event is scheduled for April and is expected to act as a catalyst for a sustained bullish trend.
By examining historical patterns, the study forecasts a period of heightened market growth for Bitcoin post-halving, based on past price surges following similar events. The halving mechanism halves miner rewards, resulting in a reduced influx of new Bitcoins into circulation.
Influence of Spot Bitcoin ETFs on the Market
The brokerage firm holds a positive outlook on the approval of 11 spot Bitcoin ETFs by the SEC, considering it a significant driver behind Bitcoin's price surge. The report emphasizes the capital inflow into these ETFs as a key determinant of Bitcoin's value, expecting this trend to continue as more individual investors include Bitcoin in tax-advantaged accounts like IRAs.
Despite Bitcoin's price outperforming the inflows into ETFs, the report anticipates the current momentum to be maintained. It also addresses the underperformance of public Bitcoin mining companies compared to Bitcoin's market performance, suggesting that this discrepancy could be due to uncertainties surrounding miners' profitability and the emergence of spot ETFs as an alternative investment avenue.
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