Why did Bitcoin go up in value in 2024?

from Diary 2024-03-08 Why did Bitcoin go up in value in 2024?

Why did Bitcoin go up in value in 2024? The recent spike in Bitcoin prices has been attributed to increased investor interest, excitement over the Bitcoin ETF, and anticipation surrounding the upcoming halving event.

• There are two main types of bitcoin ETFs: bitcoin futures ETFs and spot bitcoin ETFs.
  • Bitcoin Futures ETFs:
    • These ETFs do not hold actual cryptocurrency, but use futures contracts that are linked to the price of bitcoin.
    • The first official bitcoin-linked ETF is the ProShares Bitcoin Strategy ETF (BITO), approved by the SEC in October 2021.
  • Spot Bitcoin ETFs:
    • Spot Bitcoin ETFs are directly linked to the price of Bitcoin by holding large amounts of the cryptocurrency itself.
    • The SEC approved 11 spot Bitcoin ETFs in January 2024, allowing investors to trade these funds on major exchanges like stocks.
  • Spot Bitcoin ETFs have gained popularity due to their convenience and accessibility, leading to significant inflows into these funds and contributing to the surge in Bitcoin prices. These ETFs provide a regulated and secure way for investors to participate in the cryptocurrency market without directly owning and operating cryptocurrencies themselves.
• A bitcoin halving event is a significant event in the cryptocurrency world in which the reward for mining bitcoin transactions is halved. This reduction in rewards affects the rate at which new bitcoins are created, ultimately affecting the available supply of new coins. A halving event occurs approximately every four years or after 210,000 blocks have been mined.
  • The first bitcoin halving took place on November 28, 2012, when the block reward was reduced from 50 bitcoins to 25 bitcoins. Subsequent halves took place on July 9, 2016 (12.5 bitcoins) and May 11, 2020 (6.25 bitcoins).
  • The next halving is expected to take place in April 2024, when block rewards are expected to decrease to 3.125 BTC.
  • Half-declining events are designed to control the supply of new bitcoins entering circulation, maintain scarcity, and combat inflation by reducing the rate at which new coins are generated.
  • The impact of a Bitcoin halving event extends beyond mining rewards to market dynamics, miner profitability, network security, and overall price trends. Historically, bitcoin halving events have been associated with significant price increases in bitcoin due to reduced supply and sustained demand. From Minor’s point of view, the electricity bill stays the same, but the compensation is cut in half, right? Wouldn’t they leave? Miners, especially those in areas with high electricity costs or using less efficient mining equipment, may become unprofitable and find it difficult to continue their operations. As a result, some miners may exit the market.
• However, the impact of a halving event is complex and does not generally mean that the miners will withdraw. The following points are taken into account
  • Expectations of higher prices: past halving events have been associated with higher bitcoin prices in the long term. Miners may endure short-term revenue declines in anticipation of future price increases.
    • Hmmm, if you think it can be contained by a “short-term decrease in revenue”, then maybe. Would you rather expect entities that have hardware.
  • Increased efficiency: In anticipation of the halving event, many miners are expected to accelerate their investments in more efficient mining equipment. This will reduce costs and maintain or improve profitability.
  • Geographic relocation: one strategy is to relocate mining activities to areas with lower electricity costs. This can lower operating costs and mitigate the impact of a reduction by half.
  • Adjustment of mining difficulty: The bitcoin network has a mechanism to reduce mining difficulty when miners withdraw. This improves the profitability of the remaining miners and maintains network stability.
    • Really?
    • Adjustment of mining difficulty: The network may reduce the mining difficulty in response to a decrease in the hash rate due to the withdrawal of miners. This means improved profitability for the remaining miners.
    • If the average block generation speed is shorter than 10 minutes in the retargeting period, the difficulty level is automatically increased; conversely, if the period is longer, the difficulty level is decreased.
      • Okay.

So unprofitable minorities leaving the market doesn’t affect the price in itself?

Hash rate for the past 3 years

• 
• https://bitinfocharts.com/comparison/bitcoin-hashrate.html#3y

I realize that many people think that because prices have gone up in past halving events, they will go up again this time, but the difference is that Ethereum didn’t move to PoS last time, right, and this could affect it? …

We had a lot of discussions, but GPT believed in a bright future for cryptocurrencies.

• Well, I heard you say that investors will rebalance to ETH if BTC goes up, and I thought that maybe it doesn’t really make a difference which virtual currency it is.

I thought, “I don’t understand,” so I asked AI, and the characters in the diary became full of AI.

One last witty remark. Thanks for the interesting discussion. Certainly, given the relationship between Bitcoin and Ethereum and the dynamics of the virtual currency market as a whole, it is not necessarily true that past patterns will simply repeat themselves.

While the price impact of Bitcoin’s halving event is noteworthy, other factors, such as Ethereum’s PoS transition, could also have a significant impact on the market. Investor sentiment and market sentiment will also play an important role.

The virtual currency market is still developing and highly uncertain, so it is difficult to make long-term predictions. I think it is important to keep a close eye on fundamentals and analyze market trends dispassionately. I look forward to learning more about this interesting field as we continue our discussions.

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