Bitcoin price rise in January 2024: reasons and forecasts

The price of Bitcoin exceeded $46 thousand amid strong growth in the first days of the new year. At the same time, quotes of other leading cryptocurrencies are falling. Experts believe that liquidity is flowing into Bitcoin amid expectations of SEC approval of several spot ETFs from leading financial institutions. In addition, the game for raising has become more active against the backdrop of the upcoming halving. Analysts are convinced that this year Bitcoin could test the level of $100 thousand if key regulators do not begin to tighten policies towards cryptocurrency.

According to Coinmarketcap, on January 8, the price of Bitcoin (BTC) settled above $46 thousand, reaching a new high since April 2022. Over the week, the rate of the leading cryptocurrency increased by more than 8%. An active bullish game has been going on since the fall of 2023, and during this time Bitcoin has risen in price by more than 70%. It is significant that other cryptocurrencies, which also showed strong growth at the end of the year, lagged behind the leader in January. In particular, the rate of ether (ETH) amounted to $2.27 thousand, having lost almost 2% over the week. Other altcoins lost even more: BNB – 2.4%, XRP – 9%, Solana – 9.5%, Dogecoin – 12.6%, Cardano – 15.6%.

According to experts interviewed by Kommersant, the rise in the bitcoin rate is primarily associated with positive expectations for the approval of spot ETFs from the SEC (see “Kommersant” dated December 11, 2023). Late last week, BlackRock, Grayscale, Fidelity, VanEck, Valkyrie, Franklin Templeton, Invesco and a number of other financial institutions filed updated applications with the SEC to launch a Bitcoin ETF. According to Reuters, the SEC vote will take place on January 10.

“Institutional interest in cryptocurrencies is on the rise, and if a Bitcoin-linked fund goes public, it is expected to pave the way for a strong influx of institutional capital,” explains OKX chief commercial officer Lennix Lai. According to VG Group managing partner Vagiz Nurullov, altcoins may decline in price due to liquidity flowing into Bitcoin.

The chances of launching an ETF in the near future are quite high, says Gleb Kostarev, former head of Asia and Eastern Europe at Binance. There is already a struggle between issuers for the client – commissions vary from 0 to 1.5%, he says. Most analysts, according to the expert, agree that the regulator no longer has the opportunity to postpone ETFs and the long-awaited approval will still be received this week. But, Vagiz Nurullov admits, the SEC is not formally obligated to even comment on a potential decision to postpone the deadline to March.

The growth of institutional interest in cryptocurrencies is also facilitated by the uncertainty associated with the monetary policy of the American regulator and the prospects for reducing the key rate, Lennix Lai believes.

Investors, according to the expert, fear that inflation in the US economy will remain at a high level, and therefore, the Fed will not dare to reduce the key rate until the target level is reached.

Therefore, some investors look at cryptocurrencies as one of the possible tools for hedging inflation risks, explains Mr. Lai. At the same time, a positive decision by the SEC could lead to a correction in the Bitcoin market according to the principle of “buy on rumors, sell on facts.” “There are various strategies, but many funds and large players can fix their positions when deciding on ETFs,” notes Vagiz Nurullov.

However, investors have an equally compelling reason to play bullish – the upcoming halving in April 2024 (the process of reducing the rate of generation of new units of cryptocurrency and, as a result, reducing the amount of remuneration to miners for the mined block).

The block reward will be reduced to 3.125 BTC from 6.25 BTC currently. At the same time, at the end of December last year, a new historical maximum was recorded for the hashrate of the Bitcoin network (an indicator of computing power) used for mining. The hashrate reached 544 EH/s compared to 250 EH/s at the beginning of the year.

This indicates an increase in the activity of miners who are investing in equipment to increase profits against the backdrop of rising Bitcoin prices since the beginning of the year, noted BitRiver financial analyst Vladislav Antonov. With the increase in computing power, the complexity of mining also increases, which leads to a decrease in profitability – over the month it fell from $0.136 to $0.09 per terahash per day, he noted.

Thus, miners have to put in more and more effort to get the reward for the next block. “Accordingly, part of the bitcoin has to be sold to offset the costs of doing business. If after halving the price does not reach $69 thousand, then miners will begin to close their business,” explains Mr. Antonov.

At the same time, market participants expect that this year the record for the value of Bitcoin, reached in November 2021 ($69 thousand), will be updated. With the approval of the Bitcoin ETF and “no tightening of the screws by the US Treasury and the SEC,” it is quite possible to see testing of the $100 thousand level, Mr. Antonov estimates. In addition, the price of ETH, the second most popular cryptocurrency, according to his estimates, could also reach a new high and rise several times over the course of the year.

Ksenia Kulikova