The cryptocurrency market performed strongly in the first quarter, driven by the approval of spot Bitcoin exchange-traded funds (ETFs) and expectations that major central banks will begin to lower interest rates.
According to the information compiled by the AA correspondent, interest in Bitcoin, which was launched in 2009 by a person or group named Satoshi Nakamoto, whose real identity is still unknown, with a decentralized and limited supply concept of money, continues in 2024.
Despite the ups and downs in its price since that date, Bitcoin, which has caused significant gains and losses in global markets, exhibited an upward performance in the first quarter of this year in terms of price and market volume.
Bitcoin, whose price has been on an upward trend since the last quarter of 2023, broke a record by reaching $73,750 on March 14 after the US Securities and Exchange Commission (SEC) approved 11 Bitcoin spot ETF applications.
According to data from analysis company Coinmarketcap, the price of Bitcoin, which was traded at $42,200 as of January 1, rose to $69,600 as of March 31, an increase of approximately 70%.
The halving process, which will take place this month and reduce the new Bitcoin supply, is also effective in the price of Bitcoin, which gained approximately 157% in value last year.
While thousands of different cryptocurrencies other than Bitcoin were traded, Ethereum, which ranked 2nd in terms of market value, gained nearly 60% in value, rising to $3,500 in the first quarter.
The value of the entire global cryptocurrency market increased by $1 trillion in the first quarter, reaching $2 trillion 660 billion.
Bitcoin ETFs approved for the first time
Among the main reasons for the rise in the Bitcoin and cryptocurrency markets in the first quarter, ETFs approved by the SEC on January 11 stand out.
Following the approval of the forward Bitcoin ETF in 2021, many asset management companies applied to the SEC for a spot ETF. Among the companies that received approval, the most notable was BlackRock, whose assets under management reached $10 trillion.
These investment funds, which are traded on stock exchanges with Bitcoin, have thus begun to attract the attention of more institutional investors.
While the amount of investment in ETFs in the first quarter reached approximately $12 billion, BlackRock stood out as the institution that attracted the most investment among ETFs.
BlackRock Chief Executive (CEO) Larry Fink told Fox Business on March 27 that the interest in question exceeded his expectations and said, “I am quite optimistic about the long-term sustainability of Bitcoin.”
The halving process and the impact of Fed expectations
Another factor that affected the rise in the cryptocurrency market, especially Bitcoin, was the halving process.
While Bitcoin’s halving process means that the rewards obtained from Bitcoin mining will be halved as of this date, this means that the rewards obtained from the Bitcoin mining halving process will decrease by approximately 50%. While it occurs approximately every four years in order to keep Bitcoin’s supply limited to a total of 21 million, the next Bitcoin halving is expected to occur in April 2024.
Analysts state that the process supports Bitcoin’s price as it complicates the supply of the largest cryptocurrency.
The Fed’s interest rate cut expectation is also defined as a factor that may affect the price of risky assets such as Bitcoin and other cryptocurrencies.
While investors’ interest in alternative assets that offer higher return potential when interest rates are low is increasing, Bitcoin also stands out from time to time in the market of risky assets.
Fluctuations in cryptocurrencies will continue
Despite its strong performance in the first quarter, the cryptocurrency market frequently experiences significant losses in value.
Bitcoin, which reached its all-time high price of $73,500, dropped below $65,000 on April 2 and lost more than 10% of its value in a short time.
The failure of regulators in countries to fully clarify the laws and regulations regarding crypto money causes uncertainties regarding the future of the market to continue.
Experts state that macroeconomic developments, various decisions that may be taken by regulators and developments in the field of technology, especially block-chain, will be decisive in the performance of cryptocurrencies in the rest of 2024.
Source: AA / Prepared by Irem Yildiz