Leading broker Canaccord Genuity released a research report today indicating that the approval of spot exchange-traded funds (ETFs) in the US, the anticipated fourth block reward halving in April, and an increased appetite for risk in financial markets have contributed to Bitcoin‘s (BTC) remarkable rise of over 60% in the first quarter of the year. The report highlights the significance of these factors in Bitcoin’s rise and foresees more positive momentum in the cryptocurrency market.
Emphasis on Block Reward Halving
Analysts led by Michael Graham at Canaccord Genuity, while the macroeconomic outlook and potential interest rate cuts remain uncertain, believe that the planned fourth block reward halving in April could further strengthen the tailwind propelling Bitcoin’s rise. The block reward halving, which reduces the block reward for miners by 50% in BTC terms and occurs approximately every four years, contributes to a decrease in Bitcoin supply and potentially triggers a tendency for price increase.
The report notes that historical patterns suggest a potentially stronger period of increase for Bitcoin and the cryptocurrency market in the months following the upcoming block reward halving. This expectation is based on Bitcoin’s significant price increases following previous halvings.
“Impact of Spot Bitcoin ETFs to Persist”
Canaccord Genuity analysts express optimism regarding the US Securities and Exchange Commission’s (SEC) approval of 11 spot Bitcoin ETFs in the first quarter, anticipating that this regulatory development will further boost the upward momentum of Bitcoin’s price.
The report underscores the importance of inflows into spot ETFs in raising Bitcoin’s price, suggesting that despite Bitcoin’s price increase in the first quarter surpassing ETF inflows, the momentum from ETFs is expected to continue as individual investors start including BTC in tax-advantaged accounts like IRAs (Individual Retirement Accounts) in the US. Analysts foresee that as individual interest in the largest cryptocurrency continues to grow, spot ETFs could become a significant component of Bitcoin’s price dynamics in the future.
Furthermore, the report interestingly points out that public Bitcoin mining companies have underperformed compared to Bitcoin’s price performance in the first quarter, highlighting a potential divergence between miner stocks and the price of the largest cryptocurrency. Canaccord Genuity analysts partly attribute this divergence to the uncertainty surrounding miners’ profitability ahead of the upcoming block reward halving and the presence of spot ETFs offering stock investors an alternative way to invest in Bitcoin.
