Bitcoin is riding a spring rally of its own. The leading cryptocurrency has surged close to 90% since January 23, reaching new all-time highs. Earlier this week it touched $72,000 per unit, the highest level ever. Analysts agree the ascent is linked to the approval of Bitcoin ETFs in the United States. The surge is driven by strong retail demand, while the U.K. financial regulator recently authorized Exchange Traded Notes for institutional investors. This combination of developments is viewed as a positive signal for the sector (Source: financial market commentary by Juan J. Fernández-Figares, Link Securities SV).
The cryptocurrency’s reach into Anglo-Saxon markets has already accelerated. In Europe, the European Securities and Markets Authority is preparing to oversee crypto assets under the MiCA regulation, which will become the framework for supervising these digital assets from December 2024. Analysts note that in 2021 the price rally was driven by retail investor enthusiasm, but this time the rise appears to be powered mainly by institutional interest in the United States, according to Javier García de la Torre, director at Binance Spain and Portugal. He also points out that the halving is contributing to the rally (Source: Javier García de la Torre, Binance).
In the crypto industry, the reward for mining new Bitcoin halves every four years, reducing the supply of new coins. Historically, Bitcoin has seen price increases in the months following each halving (Source: market analysis by Javier García de la Torre, Binance). The macroeconomic backdrop, characterized by inflation, geopolitical uncertainty, and unclear timing of a rate cut, prompts investors to seek safe havens in alternative assets, including gold and cryptocurrencies.
As investors show growing interest in cryptocurrencies, regulators are already gearing up for MiCA’s entry into force. The CNMV indicated in its 2024 Activity Plan that it is evaluating how to apply MiCA and the related cybersecurity provisions of DORA starting in December 2024. It is important for cryptocurrency holders and potential clients to understand that MiCA rules will not apply to crypto services until that date, ESMA notes (Source: ESMA and CNMV statements).
“MiCA will bring regulatory clarity and strengthen the legitimacy of the crypto industry. It will create certainty and security, something both individual and institutional investors need. Regulators in Europe are signaling a strong interest in crypto investment,” says Javier García de la Torre of Binance (Source: Binance commentary).
Bitcoin’s ascent may extend further
The current stage suggests that, driven by a new regulatory and market backdrop, Bitcoin could continue its climb in 2024. It is difficult to predict future performance of any asset, and larger price corrections could occur. Yet the market shows robust, positive momentum and long-term potential, per statements from industry leaders. Some analysts believe the price could keep rising due to rising interest in this market, while others anticipate periodic pullbacks as part of normal market dynamics (Source: Binance and Link Securities insights).