Cryptocurrency investors are expecting 2024 to be a watershed year for crypto trading with landmark events such as listing of crypto exchange-traded funds (ETFs) and the upcoming Bitcoin halving day set to fuel an extended bull run.
Crypto holding of Indian investors, which today stands at nearly $4 billion, is predicted to double as Bitcoin (BTC) prices are expected to touch new all-time highs after the halving day in April and Ethereum (ETH) ETFs are likely to get approval soon.
Bitcoin halving is a once-in-four-years event when the number of new coins awarded to its miners when they add a group of transactions, or a block, to the Bitcoin blockchain are cut by half. This helps reduce supply of the cryptocurrency and makes it more valuable.
The next halving is expected to occur in April 2024 when reward for each BTC miner will be cut from 6.25 BTC to 3.125 BTC, thus cutting the overall new currency supply into half.
Historically, there have been four halving cycles and each time BTC prices surged – by as much as six times in certain instances.
Edul Patel, CEO and cofounder of crypto exchange Mudrex, said trading gained momentum since January as investors started choosing compliant Indian exchanges after the ban of offshore exchanges. “We have already doubled our AUM (assets under management) to $10 billion within two months,” he said.
“We believe the hype cycle built before halving has already started with BTC prices touching all-time high,” Patel said. “2024 is a good time for new investors to enter the crypto assets class as 2025 is going to be the real blockbuster year, as is historically observed in the price trajectory after previous halvings,” he added.
Nirmal Ranga, chief revenue officer at exchange platform company ZebPay, said the halving mechanism is a crucial feature of Bitcoin’s deflationary framework.
“The halving event significantly improves the supply dynamics of Bitcoin,” he said. “This systematic reduction creates potential supply pressure, a factor when coupled with ongoing market improvements, such as ETF approvals and other innovations, could stimulate demand. Consequently, this has the potential to influence crypto markets, contributing to observable price impacts,” Ranga said.
Rajagopal Menon, vice president at WazirX, said this halving cycle shall be unique as the BTC currency shall be scarcer than usual.
“Bitcoin ETFs have already absorbed 92.3% of the total projected Bitcoin production for 2024, which means cutting the supply into half shall further make free-float trades even more competitive. This may cause an unprecedented price surge in the days after halving in April,” Menon said.
The US Securities and Exchange Commission in January gave a green light to 11 spot ETFs after almost a decade of rejecting applications. These ETFs combined have already breached $10 billion in AUM and the value of BTC has surged 12% since then. Going forward, the market is expecting similar approvals for Ethereum and other currencies as well.
But, for Indian investors, the trajectory has been a little different.
“The weekly average volume on Indian exchanges during the ETF approval day was around $12 million,” said Zakhil Suresh, CEO of crypto investment platform BitSave. “Currently, it is less than $6 million – this shows the interest has significantly reduced after ETF approval. Although Bitcoin halving is upcoming, its impact on the demand has yet to be started,” he said.