How Bitcoin ETFs could affect the price of Bitcoin after the Halving? | Learn

Spot Bitcoin ETF

In January of 2024, the SEC made a historic decision approving 11 Spot Bitcoin ETFs. This approval paved the way for Bitcoin to become more accepted and it legitimized its existence. The introduction of these ETFs has led to significant institutional investment in Bitcoin to support their offerings. While a Bitcoin ETF is a fund for investors to gain exposure, it is not actual bitcoin. Individuals are investing in a fund through which financial institutions purchase substantial quantities of Bitcoin.

Following the approval of the Spot Bitcoin ETF, billions of dollars of Bitcoin have been purchased by these funds.

The Upcoming Bitcoin Halving

Interestingly, the approval of the Spot Bitcoin ETFs occurred just three months before the anticipated fourth Bitcoin halving event. The Bitcoin halving is a scheduled event within the Bitcoin network that happens every four years. It’s designed to cut the supply of new Bitcoin being created. Effectively this reduces the pace at which new Bitcoin is introduced into circulation as only 21 million will ever be created.

Bitcoin Current Production Rate

Currently, the Bitcoin network generates about 900 new bitcoin each day. However, after the halving event, this will drop to 450 bitcoin per day. This reduction in new bitcoin creation is a programmed component of Bitcoin's economic model, designed to mimic the scarcity and deflationary aspects similar to gold.

Consider it like this: If oil companies reduce their drilling efforts, leading to less oil being available while the demand for fuel, manufacturing, and heating remains unchanged, the price of oil tends to rise due to its reduced supply against steady to potentially increased demand.

Supply and Demand

The upcoming Bitcoin Halving and the introduction of Spot Bitcoin ETFs present a supply and demand situation. With the halving, fewer new bitcoin will enter circulation, leading to a tighter supply. Meanwhile, institutions managing these ETFs have already purchased billions of dollars of real bitcoin, and demand is expected to grow. This could significantly influence bitcoin's market value.

Historically, Bitcoin halving events have led to periods of increased bitcoin prices, indicating a relationship between decreased supply and rising demand. With the addition of Wall Street actively buying bitcoin to support their ETFs and the upcoming halving, the stage is set for an intriguing balance of supply and demand dynamics.

Let The Halving Begin!

Due to these factors, more and more investors are keeping an eye on Bitcoin, with hopes of substantial growth throughout the year.

At iTrustCapital, investors have the unique opportunity to buy and sell real bitcoin within a tax-advantaged IRA. This approach empowers people to leverage the benefits associated with IRAs.

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DISCLAIMER

This article is for information purposes only. It does not constitute investment advice in any way. It does not constitute an offer to sell or a solicitation of an offer to buy or sell any cryptocurrency or security or to participate in any investment strategy.

iTrustCapital is a cryptocurrency IRA software platform. It is not an exchange, funding portal, custodian, trust company, licensed broker, dealer, broker-dealer, investment advisor, investment manager, or adviser in the United States or elsewhere. iTrustCapital is not affiliated with and does not endorse any particular cryptocurrency, precious metal, or investment strategy.

Cryptocurrencies are a speculative investment with risk of loss. Precious metals are a speculative investment with risk of loss. Cryptocurrency is not legal tender backed by the United States government, nor is it subject to Federal Deposit Insurance Corporation (“FDIC”) insurance or protections. Clients do not receive a choice of custody partner. The self-directed purchase and sale of cryptocurrency through a cryptocurrency IRA have not been endorsed by the IRS or any regulatory agency. Historical performance is no guarantee of future results.

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