Institutional Investment and Spot ETFs Shape the Fourth Bitcoin Halving
- The 2024 Bitcoin halving has seen a 400% surge in the global crypto user base since the 2020 halving, with Bitcoin alone gaining an estimated 219 million users.
- The fourth halving witnessed an unprecedented pre-halving price rally, with Bitcoin reaching a new all-time high of $73,600 on March 13, 2024, benefiting miners and their cost management.
- The introduction of spot Bitcoin ETFs in the U.S. and the enhanced network security and decentralization further distinguish the 2024 halving from previous events.
The fourth Bitcoin halving, which occurred on April 20, 2024, has brought several unique aspects that set it apart from the previous three halvings. While the community eagerly awaits the potential price spike that historically follows a halving, the 2024 event has already showcased significant differences in the Bitcoin landscape.
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Exponential Growth in Crypto User Base
Since the 2020 halving, the global crypto user base has surged by at least 400%, according to various estimates. It skyrocketed to 580 million by the end of 2023, according to a report by Crypto.com. Bitcoin, being the largest and oldest cryptocurrency, now has an estimated 219 million users, up 208% from 71 million users in 2020.
Unlike previous cycles where Bitcoin’s price typically broke out after the halving, the 2024 halving witnessed an extraordinary pre-halving price appreciation. Bitcoin reached a new all-time high of $73,600 on March 13, 2024.
The pre-halving price appreciation has potentially benefited the mining industry, enabling miners to have better control over their costs, such as electricity. Fidelity Digital Assets’ director of research, Chris Kuiper, noted that miners appear to be in better shape compared to the previous halving, with lower debt levels and improved cost management. The price surge before the halving has also contributed to miners’ preparedness for the event.
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First Halving with Spot Bitcoin ETFs in the U.S.
The 2024 halving marks the first time spot Bitcoin exchange-traded funds (ETFs) are available in the United States. The introduction of spot Bitcoin ETFs in January 2024 has opened up new avenues for institutional investors to gain exposure to Bitcoin. Bloomberg ETF analyst Eric Balchunas reported that spot Bitcoin ETFs have been successful, as reflected by a surge in demand for Bitcoin. Since their debut, the combined holdings of all ten spot Bitcoin ETFs have increased by at least 220,000 BTC, worth around $14 billion.
Bitcoin has experienced significant improvements in network security and decentralization since the 2020 halving. The geographic distribution of Bitcoin mining has become more diverse, with the United States, China, and Russia being the top mining countries as of February 2024. Hashlab Mining founder Jaran Mellerud noted that the ongoing migration of miners to Africa and Latin America, seeking cheaper electricity prices, further contributes to the decentralization of the Bitcoin network. Additionally, the Bitcoin blockchain’s hash rate has increased fivefold since the previous halving, making it more resistant to attacks.
As the Bitcoin community navigates the post-halving landscape, the unique aspects of the 2024 halving, including institutional investment, spot ETFs, and enhanced network security, are set to shape the future of the cryptocurrency. While the long-term impact of the halving remains to be seen, the Bitcoin ecosystem has undoubtedly evolved since the previous halving events.
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