As the U.S. economic winter nears an end, we may finally see glimpses of good news.
Amid signs that recession is slowly dissipating and the economy is settling into a soft landing, cryptocurrency stands out with significant gains. Leading the surge is business intelligence company MicroStrategy’s market performance, which edges it closer to an S&P 500 bid, as well as the anticipated “Halvening” event set to potentially double the cost of mining Bitcoin.
Interest and unemployment rates are coming down, while consumer and producer price index indicators are lower than in December 2023. Inflation is slowing and, overall, the economy is recovering faster than anticipated after the global pandemic.
The traditional stock market is currently gaining momentum slowly, with the S&P 500 up roughly 7%, Apple down 6% since January and Tesla tumbling from $260 per share to $195.
Yet cryptocurrency has performed much better since the holidays. Bitcoin hit almost $53,000 and Ethereum is currently hovering a little over $3,000 per coin, for the first time since April 2022.
One of the biggest reasons for this surge was the approval of a Bitcoin spot exchange traded fund. The U.S. Securities and Exchange Commission signed off on 11 Bitcoin ETF applications, including funds from BlackRock, Fidelity, Ark Invest, WisdomTree and Grayscale.
The new ETFs have added an average net of $125 million each day over the past weeks, bringing more than $7.7 billion in total to market inflows. This influx of capital has bumped business intelligence company MicroStrategy’s market cap to $12 billion, bringing it closer to the possibility of entering a bid for the S&P 500.
It still has to reach $15.8 billion and meet other eligibility criteria, but many are inclined to believe the number could grow quickly considering the company was run by one of the biggest Bitcoin proponents, Michael Saylor.
Additionally, the company has more than $9 billion worth of Bitcoin in its treasury. If the price trajectory continues along this path, its market cap could swell rapidly, catapulting it into the top 500 U.S. companies and leading to further gains for the business and Bitcoin’s overall growth.
Another major reason for the digital currency’s surge is the imminent approach of the “Halvening” event. The Halvening occurs when the number of blocks, data files holding Bitcoin transaction records, reaches 840,000, set to happen in April 2024.
The reward per block will decrease from 6.25 to 3.125 BTC at that time, meaning it will become twice as expensive to mine Bitcoin. The last Halvening happened in 2020, after which the price surged from $10,000 to the all-time high price of $69,000 in less than a year.
All these factors combined set the stage for a bullish Bitcoin market, suggesting continued growth and the potential for significant gains soon.
While market dynamics are subject to change, the convergence of these factors suggests a promising outlook for Bitcoin’s solid position as a key player in the evolving landscape of digital finance.
