Bitcoin price has entered a consolidation phase in the past few weeks as investors reflect and watch the volumes in the ETF market. After initially popping to $49,000 in January, Bitcoin has remained stuck in a tight range around $43,000.
Bitcoin ETF activity
This consolidation has coincided with increased outflows from the Grayscale Bitcoin ETF (GBTC) and low daily transactions. The FTX Estate has sold substantial coins from GBTC while Gemini filed to sell coins worth over $1 billion from the fund.
In all, GBTC has lost over $5.5 billion in assets in the past few weeks as investors rotate to other cheaper funds. The closely-watched iShares Bitcoin Trust (IBIT) has attracted assets worth over $3 billion. It is followed by the Fidelity Wise Origin Bitcoin Fund (FBTC) and Ark 21Shares Bitcoin ETF, which have $2.5 billion and $665 million in assets, respectively.
Bitcoin ETF inflows have not been as dramatic as some analysts were expecting. In most cases, these ETFs take time to gain assets, especially among institutional investors. Most analysts believe that the total assets in these funds will continue rising as Bitcoin becomes an important part of balanced portfolios globally.
Bitcoin halving next
With the spot Bitcoin ETFs approved, the next key catalyst for BTC price will be the upcoming Bitcoin halving, which is set to happen in April. In most cases, Bitcoin tends to rally ahead of the halving event, as shown in the chart below.
The reason for this is that halving leads to lower Bitcoins being minted every day. Estimates are that about 900 coins are produced every day, meaning that the figure after halving will be around 450.
Keep in mind that this halving will happen at a time when there is demand from ETF companies and when supply in exchanges is still low. A combination of high demand and relatively low supplies means that Bitcoin price will likely do well in the coming months.
From a macro perspective, this halving will also happen as the Federal Reserve gears towards cutting interest rates. The Fed Rate Monitor tool points to the first interest rate cut coming in June this year. In most cases, Bitcoin tends to rise when inflation is falling and when the Fed is cutting rates.
In a statement this week, OECD, a club of rich countries, estimated that the US inflation will average at 2.2% this year, pushing the Fed to start cutting rates at least three times.
Crypto experts’ Bitcoin price forecast ahead of halving
We reached out to some of the most notable crypto experts for their opinions and forecasts for Bitcoin price ahead of halving. In a statement, Matt Luongo, the CEO of Thesis, a crypto venture studio said:
“I see the Bitcoin space curling up like a spring for post-halving action. In addition to Bitcoin’s halving machine continuing like clockwork, several major new L2 networks are launching that will bring the benefits of Solana and Ethereum to Bitcoin. These networks are all targeting the halving for their launches, hoping to coincide with a Bitcoin supply shock.”
Oxbeachball, the founder of Synonym Finance, a company that provides a cross-chain money market, noted that halving will likely benefit DeFi ecosystems that tap into cross-chain Bitcoin derivatives and liquidity. He said:
“Regardless of where you operate in DeFi, the Halving will have an impact on you. Attention, inflows and user interest are always welcome in the space. We see this as a major catalyst that’ll benefit the proliferation of all ecosystems, especially those that tap directly into cross-chain Bitcoin derivatives and liquidity."
Meanwhile, Ryan Grace, the head of tastycrypto, a company owned by IG Group, noted that he expects an initial bullish run that lasts for between 12 and 15 months. This will be followed by a major correction and then a moderate run towards the next halving. He said:
“Halving contributes to bitcoin’s scarcity, so some investors believe that it can significantly impact its price. While the price of bitcoin typically undergoes some correction immediately following a halving, historically, major increases in bitcoin’s price have occurred around a year following a halving event.”
Like Ryan Grace, Evander Smart, the founder of Bitcoin University, believes that Bitcoin could see some weakness after halving as investors sell the news. But he also expects it to rebound in the next half of the year. He said:
“The Bitcoin halving event, in April, and the Bitcoin Spot ETF, won’t yield great returns, right away. I wouldn’t expect much movement before June, or Q3. The second half of this year will be one to remember, both inside, and outside, of Bitcoin.”
