ResearchThe Weekly (3/1)

The Weekly (3/1)

Mar 1, 2024

If you’ve opened a financial news app or your #social-random company Slack channel in the last week or so, you’ve certainly seen the buzz surrounding the surge in Bitcoin prices (h/t WSJ, FT, Bloomberg). 

Starting the week at ~$51,000, Bitcoin has surged above $60k and is fast approaching its all-time highs from 2021. The performance this week follows a 30%+ rise year-to-date and a ~150% increase over the last year.

We don’t blame the news outlets, though. Bitcoin is having its IPO moment.

The SEC’s approval of spot Bitcoin ETFs has allowed the largest financial institutions like Fidelity, Blackrock, and more to offer exchange traded funds linked to the underlying price of Bitcoin just like any other security. The SEC’s green light, in many ways, could be viewed as the cryptocurrency’s ‘public offering’.

For years, the benefits of Bitcoin were only accessible to some. Now, it can be easily purchased by the public in a matter of one click in a brokerage account. Furthermore, it may be even recommended by some financial advisors as a non-correlated ‘call option’ on future growth.

What’s interesting, but not surprising, is the extent to which the recent entrants are moving markets.

With a steady amount of inflows from consumers who once didn’t have access to the asset class, ETF issuers are buying up around 11x more Bitcoin than miners are producing. It’s been a common trend since their launch but day after day, it continues to impress.

If the approval and launch of Bitcoin ETFs were Bitcoin’s IPO moment, perhaps Bitcoin’s upcoming halving in mid-April will be its next major “stock buyback”? 

If so, we think that might be quite bullish for its price.

For context: Bitcoin halving is a mechanism built into the code of Bitcoin that cuts the rate at which new Bitcoins are created by half every 210,000 blocks mined (roughly every four years).

Historically, these halving events have been catalysts for significant movements in Bitcoin’s price. Simply put, a slower rate of new Bitcoins entering circulation typically creates scarcity that has led to price jumps – similar to what we’re already seeing with these ETF entrants. 

This is a bit like when a public company announces a stock buyback plan — it reduces supply of shares which, all else equal, can increase the stock’s price per share.

Supply and demand remain the governing forces of markets. 

With decreasing supply and clearly increasing demand for Bitcoin, the stage is set for a very eventful 2024.

Have a great weekend,

– Your Titan team


Disclosures:

As of writing, IBIT is a holding in Titan Crypto.

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