The price of bitcoin (BTC) has gained nearly 20% in the past seven days and over 80% since the start of the year. The latest price action has reignited debates around the leading cryptocurrency’s historical four-year cycles and whether BTC is beginning a new bull market.
While no one can accurately predict Bitcoin’s price, the implications of a new market cycle interest most investors. The reason is not far-fetched. If the latest price action marks the start of a new bull run, then there is still a long way to go and plenty of profits on the table.
The chart below puts the potential of a new BTC cycle into perspective:
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What’s Driving the Bitcoin Increase?
After a strong start to the year, BTC and the broader crypto market saw a significant decline off the back of increased regulatory scrutiny. In early June, successive lawsuits filed by the United States Securities and Exchange Commission (SEC) against the industry’s two largest crypto exchanges, Binance and Coinbase, saw Bitcoin hit a multi-week low under $25,000.
However, a rapid turn of events has seen the leading cryptocurrency recover in a remarkable fashion. The world’s largest asset manager BlackRock with over $10 trillion in assets, filed for a trust that would enable investors to get BTC exposure through an exchange-traded fund (ETF).
Although BlackRock is not the first entity to file for a Bitcoin ETF, industry experts are backing the highly-connected fund manager to receive approval from U.S. regulators. The possibility of such a win and its implications for the broader institutional landscape of Bitcoin investing has undeniably been a key driver for the BTC price.
A Bitcoin ETF offered by the world’s largest asset manager would legitimize BTC for institutions and introduce a channel for anyone to get exposure to the asset without directly owning it. Such an approach eliminates the tedious requirements of securely storing Bitcoin and opens a new way for institutions to trade the asset on an exchange, such as the NASDAQ.
Beyond increased institutional involvement, general market sentiment is that the worst is now behind for Bitcoin following the infamous collapse of the once-leading crypto exchange, FTX. The FTX debacle, which in hindsight may have marked the bottom of the BTC bear market, saw the asset trade at $15,512.
(Source: BarChart.com)
Looking ahead, the Bitcoin halving (now less than 10 months away) is another notable milestone in the asset’s historic four-year cycle. The upcoming halving will see block rewards drop from 6.25 BTC to 3.125 BTC per block, further reducing the currency’s issued supply.
Meanwhile, time will tell whether BlackRock’s ETF filing eventually marks a key turning point in the current market cycle. Either way, the current signs appear positive for BTC, and the potential for greater institutional involvement remains promising for price action.
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