Factors that will benefit Bitcoin in 2024 and beyond include recent inflows into Bitcoin ETFs and the revival of on-chain activity. Exchange-traded funds (ETFs) raised $542 million last Friday as on-chain activity influenced by Bitcoin ordinals provides new incentives to miners ahead of the 2024 Bitcoin halving.
According to Grayscale Investments, these factors position the asset to rise sharply given its strength compared to previous halvings.
BTC is sending strong signals ahead of the halving
Previous halvings have been preceded or coincided with external events. The halving in 2012 coincided with lower European economic confidence and a debt crisis. The surge in initial coin offerings in 2016 caused prices to rise, while COVID-19 increased prices ahead of the halving in 2020 as people feared inflation from printing money.
Read more: How to Get Free Bitcoins Online in 2023 (Ultimate Guide)
Bitcoin price around BTC halving | Source: Grayscale
In 2024, at least three factors are responsible for Bitcoin rising in 2024 ahead of the upcoming Bitcoin halving in April and beyond. These include the demand shock caused by institutions buying Bitcoin for their ETFs, the surge in on-chain activity in February, and miner incentives.
According to data compiled by Bloomberg, inflows into U.S. ETFs have risen to $9 billion since their launch in January. Institutions have accumulated about 19,200 BTC in recent weeks, with half a billion dollars worth of BTC purchased on February 9, 2024. Investor demand drives the creation of more ETF shares, resulting in more BTC purchases.
Bitcoin Ordinals Support Miners’ Revenues
The April halving will reduce BTC release per block mined. This reduction preserves the value of the asset, but also means that miners receive less revenue from the coins mined. Therefore, they take various measures to survive, including selling BTC reserves and competing for Bitcoin transaction fees.
Last year, the phenomenon of Bitcoin ordinals, an innovation that embeds digital files into Bitcoin units called satoshis, helped miners deal with increasing difficulties in the Bitcoin network. Since its launch, Ordinals transactions have at times been responsible for over 20% of miners' revenue.
Read more: What is Bitcoin? A Guide to the Original Cryptocurrency
Medium Bitcoin Transaction Fee (3 Months) | Source: Glassnode
The average fee miners earned from transactions rose to a three-month high of $24.96 in four days from $5.17 on December 12, 2023. The increase coincided with OKX's announcement of a new Carnival registration service on December 14, 2023.
Ordinal numbers have also contributed to a surge in on-chain activity as developers began exploring projects. On-chain analysis revealed that the number of addresses with robust activity increased to 891,692 on 11/2024. Grayscale predicts the recent expansion of the ecosystem and suggests that future developer activity will increase Bitcoin fees and further strengthen its market position.
“While it has long been touted as digital gold, recent developments suggest that Bitcoin is evolving into something even more significant.” Driven by a surge in on-chain activity, supported by significant market structure dynamics and underscored by its inherent scarcity “Bitcoin has proven its resilience,” Grayscale said.
BeInCrypto contacted Michael Saylor, a prominent Bitcoin supporter, for comment but did not receive a response at the time of publication.
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