Bitcoin hasn’t been above a $50,000 USD valuation since December 2021. Significantly, 2021 was also when Bitcoin hit its previous all-time high of just under $70,000 USD per BTC. But with Bitcoin now trading above $50k again for the first time in over 2 years, you may be wondering if the price threshold is here to stay.
Well, we can’t say for certain, but we’re going to discuss Bitcoin’s previous foray into the realm above a $50k price valuation, the upcoming halving, spot Bitcoin ETFs, and our thoughts on whether it’s back for good. Let’s jump in.
Remembering Bitcoin’s Historic 2021
The year following Bitcoin’s last halving event, in May 2020, led to Bitcoin having its most historic year of price action thus far. By May 2021, Bitcoin was trading above $50,000 for the first time in its history. It only lasted above that mark from March 2021 to mid-May before dropping below.
It wasn’t the end of the year for Bitcoin though, in fact it was a year in which the king of crypto saw a double top. Bitcoin’s price floated between the low $30,000 mark and the mid $40,000 mark before exploding at the end of September 2021 and going up all through October (Uptober!) before topping out at its all-time high of $68,789 on November 20, 2021.
2021 is the only year in which Bitcoin has ever been above $50,000 before now. It stayed above that mark for about 2 months between mid-February into the beginning of May, before it went back above $50k again at the end of September 2021. It dropped below $50k as we entered 2022 and stayed down below the mark until this resurgence in 2024.
A Trillion Dollar Market Cap
A $50,000 Bitcoin price benchmark is significant because it is the threshold where Bitcoin starts to have close to a trillion dollar market cap, and it gets over that threshold around $51,000 with the current circulating supply of under 20 million BTC. When the BTC circulating supply hits 20 million BTC, a $50k BTC price will always be a trillion dollar market cap.
You may not realize it, but a trillion dollar market cap makes Bitcoin the 8th biggest market cap amongst all major companies worldwide, falling just short of Meta (Facebook) but above companies like Visa and Tesla.
Though Bitcoin isn’t a company, its place as a store of value in society seems to be materializing.
Spot Bitcoin ETFs Absorbing New BTC?
Though Grayscale’s selloff of Bitcoin was absorbed by most of the other major spot Bitcoin ETFs, the other major providers are doing more than just absorbing what Grayscale is selling.
In the image below, we can see the Bitcoin inflows to the big 4 spot Bitcoin ETFs for the first six weeks of their being on the market. On the image, there is also a line drawn for 6,300 and 40,000 BTC. The 6,300 line is significant because that is the amount of Bitcoin being mined every week. You can clearly see that inflows to the ETFs are vastly outpacing the rate at which Bitcoin is being mined.
With the halving approaching in April, and the current pace at which Bitcoin is being bought, this halving may play out differently than any of the ones before it.
As expected the major Bitcoin ETF funds are buying huge amounts of BTC.
What Might Happen After this Halving?
Bitcoin’s price has always performed well after a halving event, with the last one being the first time after which Bitcoin hit a $50k price point. Before that halving event in May 2020, Bitcoin was trading around $9,000. It was above $50,000 one year later, and hit its all-time high of $69,000 in November 2021, even after falling below $50k for 4-5 months before taking off in the fall.
There are often people within the cryptocurrency sector who will say that the Bitcoin halving event is already priced into the price of BTC. However, it certainly doesn’t feel that way this time. When you look at the image in the previous section, we can see that over the first six weeks of the spot Bitcoin ETFs being on the market, the providers have added well over six times the amount of Bitcoin being mined to their holdings for four of six weeks so far.
If the trend of spot Bitcoin ETFs adding 40k units of BTC to their holdings every week continues leading into the halving and then on the other side of it, it seems like there will be some sort of supply shock. There will only be 3,150 BTC being mined every week at that point, meaning that ETFs buying BTC at current rates would be buying over 10x the new supply coming to market.
It would be hard for anyone to argue that this sort of situation won’t result in Bitcoin’s price climbing higher.
$50k BTC Here to Stay?
Though no one can say with any certainty that a $50,000 Bitcoin price point is here to stay, there seems to be some writing on the wall. Unlike the last time when Bitcoin hit $50,000, there are multiple institutions buying up BTC for their spot Bitcoin ETF products.
Not only that, but these institutions are buying much more BTC than is being mined on a weekly basis, which should create some supply constraint should the pace continue. Never mind the fact that retail investors aren’t even really buying Bitcoin at the moment and we may have a perfect storm of FOMO and supply shock if Bitcoin’s price starts to take off.
It may not be certain that it’s here to stay, but it seems like it has a better chance than ever before.
