New market dynamics

Halving, ETFs and political tailwind. The year 2024 already had some historic events in store for the crypto market. What will determine the direction of Bitcoin and Co now?

Regulatory, technical and industry-specific developments heralded an end to the crypto winter in 2024 and fueled both market euphoria and new price records. The American Bitcoin ETFs and the Bitcoin halving changed the market dynamics substantially. BlackRocle's IBIT ETF recorded a record series of 71 days of uninterrupted inflows after its launch and the Bitcoin halving on April 20 halved the supply of newly mined Bitcoin and thus the reward for miners. While Bitcoin adapts to the new circumstances with short-term volatility, ETF flows, miner behavior, and macroeconomic and political factors will determine the medium-term outlook for cryptocurrencies.

Macroeconomic factors and short-term price movements Even before the halving, Bitcoin reached a new all-time high and rose by over 50 percent since the beginning of the year. After reaching $72,000, it subsequently encountered resistance several times, leading to speculation that the rally would end prematurely. Just recently, economic uncertainty caused the price to bounce and correct near the all-time high several times. After the publication of the positive US labor market data on June 7, Bitcoin lost $1,300 within an hour. Just one week later, on June 12, the price rose by $1,500 in a very short space of time after the consumer price index figures in the USA were lower than expected. The reason: the increased probability of interest rate cuts in the USA, which were reduced again just hours later at the FED's FOMC meeting. Interest rates remain unchanged, the prospect of only one cut this year was announced and Bitcoin reacted by falling close to 65,000 in the following days. Regardless of the changing inflation outlook, additional factors are likely to determine the medium-term development.

Institutional inflows In the first week of June alone, American ETFs bought Bitcoin worth $1.83 billion, which is almost equal to the entire May inflows and represents the largest weekly purchase since March. Since January, ETFs have seen over $15.5 billion in net inflows, holding about 5.2 percent of the total BTC in circulation. Analysts predict that continued ETF inflows could push Bitcoin above key resistance levels. Growing investor confidence is also reflected in the recent increase in investments by large companies such as Morgan Stanley and JPMorgan, which, as it was announced, have invested a total of $3.5 billion in Bitcoin ETFs.

Ethereum ETF on track In a second landmark decision this year, the SEC has approved Ether ETFs. While Bitcoin ETFs were traded immediately after approval, Ethereum may take weeks or months due to pending SEC registration. Analysts expect the launch of Ether ETFs to follow the pattern of Bitcoin, albeit with lower volumes. However, they also emphasize Ethere-um's investment potential, its dynamic app ecosystem, and its user base, which continues to grow exponentially. VanEck therefore raised its price target for 2030 to $22,000, stressing that spot ETFs should soon improve price, liquidity, and accessibility for financial advisors and institutional investors.

Mining as a stumbling block On the other hand, investors continue to fear strong selling pressure from miners. The post-halving mining landscape is challenging, as lower revenues are causing some companies to exit, which is reflected in the falling mining difficulty. Nevertheless, cautious optimism prevails. Miners around the world are developing strategies to remain competitive and are constantly upgrading their hardware to reduce long-term operating costs. In order to remain profitable in the long term after the halving, Bitcoin would first have to rise above $80,000.

Political change The approval of BTC ETFs brought regulatory clarity and promoted Bitcoin's long-term growth prospects by reducing uncertainty and encouraging wider acceptance of cryptocurrencies. The SEC's approval of Ether ETFs signals a further shift towards crypto acceptance after several court defeats. Hong Kong also approved its first spot BTC and ETH ETFs in April and other countries such as the UK, Singapore, Japan and Dubai could soon follow. As global adoption increases, the US wants to remain competitive en, and cryptocurrencies are slowly becoming an issue in the US presidential election. Donald Trump announced support for the Bitcoin mining industry and sees Bitcoin as crucial for dominance in the energy sector and protection against CBDCs, centralized digital currencies from central banks.

On Chain Why is Bitcoin still trading below $70,000 despite predominantly positive factors? Analysts see parallels to mid-2020 trends, noting increased on-chain activity and Bitcoin accumulation by large investors, similar to the period before Bitcoin rose to $64,000 in April 2021. After the 2020 halving, Bitcoin stabilized around $10,000 for months, with increased on-chain activity driven by over-the-counter trades, and then rose to $29,000 by year-end. Comparing 2024 to 2020, there is much evidence to suggest a similar pattern, signaling a possible precursor to a bull market. This theory is supported by large wallet addresses whose Bitcoin accumulation is at a nearly four-year high, reflecting 2020 levels.