A key reason for the rise in crypto currencies in 2023 is the possibility of the world’s first Bitcoin ETF over the next few months.
A rise of 165 per cent calendar year-to-date (CYTD) to around $44,000 levels has seen Bitcoin beat other asset classes like equities and gold hands down in 2023.
Frontline equity indices across the globe such as the S&P BSE Sensex, Nifty50, S&P BSE Smallcap index, US’ NASDAQ, Japan’s Nikkei 225, France’s CAC 40 and Korea’s KOSPI have returned 12 per cent to 43 per cent during this period.
Precious metals — gold, silver and platinum — have returned a negative 14 per cent to 11 per cent during this period, shows data.
The sharp rally in crypto currencies, such as Bitcoin and Ethereum (up 97 per cent CYTD), according to analysts, is partly attributed to a rise in equity markets globally amid hawkish central bank policies.
Another key reason for the rise in crypto currencies in 2023, they believe, is the possibility of the world’s first Bitcoin ETF over the next few months.
Christopher Wood, global head of equity strategy at Jefferies, recently added one percentage point to the existing investment in Grayscale Bitcoin Trust in the global long-only equity portfolio in this hope.
The other positive for Bitcoin over the next few months, Wood said, is the expectation that the BlackRock application to launch a Bitcoin spot ETF is likely to be approved soon.
‘The lack of any negative market reaction to the recent Binance settlement with the US Treasury and the Justice Department last month looks extremely positive for the crypto asset class in general, though Binance has not yet settled with the SEC. The settlement looks more akin to a smack over the knuckles than anything more dramatic,’ Wood wrote in his weekly note to investors, GREED & fear.
‘This, and the dropping of the SEC’s case against Grayscale in October, suggests the path is now clear for the approval of a Bitcoin ETF,’ Wood added.
That said, Bitcoin is expected to halve in value in April 2024. After the first halving on 28 November 2012, Bitcoin rose about 90-times in the following 12 months, while the second halving on 9 July 2016 resulted in a 30-fold gain within 18 months.
‘As for the last halving on 11 May 2020, Bitcoin rose 7.5-fold in the following 11 months to a high in April 2021 and was up eight-fold in 18 months to an all-time-high of $68,992 in November 2021,’ Wood said.
‘Meanwhile, for those traditional investors in gold who do not trust Bitcoin, GREED & fear‘s advice remains to own both. This is because of the reality that millennials are much more likely to own Bitcoin than gold,’ Wood added.
Looking ahead to 2024, Rahul Pagidipati, CEO, ZebPay, believes that there is considerable excitement within the crypto community regarding the upcoming Bitcoin halving event and several innovations taking place in the Defi space.
‘Bitcoin’s year-to-date growth currently stands at 165 per cent, which marks a clear shift in the sentiment towards crypto,’ Pagidipati said.
‘The approvals of spot ETF applications filed by various institutional investors is also another key event the industry is looking forward to.’
Feature Presentation: Rajesh Alva/Rediff.com
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