Bitcoin paints bull’s-eye on $100,000 before halving. Here’s what’s driving this crypto rally.
Some cryptocurrency bulls are now eyeing $100,000 as bitcoin’s next level, after the leading crypto asset on Friday briefly topped $70,000 for the first time in its history.
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Mark Connors, director of research at digital-asset manager 3iQ Corp, said he believes bitcoin BTCUSD is likely to reach as high as $100,000 before its next halving event — which is expected to happen on or around April 20 — as exchange-traded funds investing in the token attract institutional inflows.
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It is the first time in bitcoin’s history that the crypto has reached an all-time high within a year before halving, Connors said in a call with MarketWatch on Friday. That excludes bitcoin’s first halving in 2012, when crypto trading was at a very early stage, he noted. To date, bitcoin has had three halving events.
Halving is a mechanism written into the Bitcoin blockchain’s algorithm to control the coin’s supply, which has a cap of 21 million. At halvings, the reward for bitcoin mining is cut in half, meaning miners will receive 50% fewer tokens for verifying transactions. Halvings are scheduled to happen after every 210,000 blocks that are mined — or about every four years — until the maximum supply of bitcoin is released.
Bitcoin rallied before halving this year “because we’re now in a demand shock, while everything before was about a supply shock,” Connors said.
The investor base for bitcoin has broadened since bitcoin ETFs started trading on Jan. 11, Greg Magadini, director of derivatives at Amberdata, said in a call.
Meanwhile, BlackRock this week filed amendments with the Securities and Exchange Commission to add bitcoin into both its Strategic Income Opportunities Fund (BSIIX) and its Global Allocation Fund (MALOX).
“These filings from BlackRock help strengthen the case for bitcoin in a portfolio for the potential diversification benefits and enhanced returns,” said Charles Yu, vice president of research at Galaxy Digital.
“There will likely be a much larger impact on BTC demand from second-order effects of bitcoin ETF approval as a wide range of other investment vehicles would be likely to add bitcoin to their portfolios (e.g., mutual funds, closed-end, and private funds, etc.) across various investment objectives and strategies,” Yu wrote in a Friday note.
As bitcoin rallies, ether ETHUSD has also been on the rise, trading near $4,000 on Friday, according to CoinDesk data. The second-largest crypto by market capitalization is still more than 17% off its record high of $4,865.57, reached in November 2021.
Investors are awaiting May 23, a critical deadline before which the SEC must decide whether to approve spot ether ETFs.
Still, even if an ether ETF were to be approved, “the impact on the market might be minimal compared to bitcoin,” noted Thomas Tang, vice president of investments at crypto venture firm Ryze Labs.
Six ether-futures ETFs generated a total of $2 million of trading volume on their first day of trading, while the ProShares Bitcoin Strategy ETF BITO, the first ETF investing in bitcoin futures, saw trading volume of more than $1 billion on its debut, Tang noted.
