The market is showing great interest in accumulating bitcoin (BTC) and/or having exposure to its price. One example of this is that ETFs based on the digital currency listed on US stock exchanges recorded their fifth consecutive day of capital inflows yesterday, Wednesday.
In total, Money flow into bitcoin ETFs was $105.84 million during the last trading day.
Below, in the graph provided by the platform SosoValuewe can see how the net inflows and outflows of money from these financial products have been, day by day since their launch in January 2024:
The BlackRock-managed IBIT ETF reported daily net inflows of $184.38 million. The only other fund with net inflows on Wednesday was Bitwise’s BITB, with a positive inflow of $2.07 million. All other ETFs had negative or neutral net inflows on Wednesday.
These capital inflows into ETFs are positive for the price of bitcoin. As explained in Criptopedia (educational section of CriptoNoticias), spot ETFs are backed by the underlying asset —that is, by bitcoin— and, therefore, when there is high demand for these investment funds, management companies must buy BTC. By simple law of supply and demand, this is bullish for the BTC price, which remains above $63,000, as can be seen in the following chart. TradingView:
Investors anticipate a historically good month for bitcoin
These market movements can be interpreted as anticipating what is to come. Evidently, investors have high expectations for the remainder of 2024.
In 5 days, the fourth and final quarter of 2024 begins. The fourth quarter of each year has historically been a strong period for financial markets, and bitcoin has been no exception. On numerous occasions, this last quarter has been marked by increased liquidity and widespread optimism, which favors the appreciation of assets considered “risky” such as bitcoin.
From a seasonal perspective, the final weeks of the year typically see an increase in economic activity, with consumption and investment rising in the face of the fiscal year-end in many regions. This tends to create a context of confidence for investors looking to capitalize on the momentum of growth assets.
And, within the fourth quarter, October is a particularly positive monthto the point that many joke that it should be called ‘uptober‘ (a play on words that could be translated as ‘bullish October’).
The following graph, taken from the Coinglass platform, shows what the Bitcoin monthly returns in every year since 2013:
This year, an additional factor that cannot be ignored is the Bitcoin halving, a scheduled event that halves the reward for each block mined and which occurred in April.
Historically, After the halvings, bitcoin experiences a period of significant growthas the supply of new bitcoins is reduced, increasing the scarcity of the digital currency. The six months after the halving typically mark the time when this effect begins to be felt most strongly, adding an additional incentive for investors looking to maximize their returns in this period.
Facing the 2024 US presidential electionPolitical impact can also play an important role in market behavior. Both Donald Trump and Kamala Harris, the two main contenders, have declared —each with their particularities and differences— that they will have a favorable attitude towards the cryptocurrency industry, which could generate an environment of greater certainty and confidence in the regulatory future of bitcoin. The promises of policies that do not hinder the development of this industry have been well received by market players, who see in these statements a boost for the consolidation of cryptocurrencies as respected and legitimized financial assets.
In terms of monetary policy, expectations that the US Federal Reserve (Fed) will maintain a flexible stance to avoid an economic recession in 2024 also play in favor of bitcoin. A lower interest rates and an expansionary monetary policy have proven to be beneficial for volatile assets.
And, as CryptoNews has noted, fears of a recession in the world’s major financial and economic powers are not out of the question. As investors look to diversify their portfolios and protect themselves against inflation and other macroeconomic risks, both bitcoin and gold continue to stand out as an attractive option.
This confluence of factors, from the halving to the elections and monetary policy, creates a favorable scenario for bitcoin to have an outstanding performance in the fourth quarter. Investors appear to be positioning themselves for what’s ahead.
Disclaimer: The views and opinions expressed in this article belong to the author and do not necessarily reflect those of CriptoNoticias. The author’s opinion is for informational purposes only and does not constitute investment advice or financial advice under any circumstances.