Following the US Securities and Exchange Commission's (SEC) approval of 11 Bitcoin exchange-traded funds (ETFs), and with a Bitcoin halving expected in April, the cryptocurrency regained the top spot for asset annual return on investment as its price surged more than 150%.
Prices jumped to US$48,494 per Bitcoin in early 2024 before consolidating to around $42,000 after the US regulator officially endorsed spot Bitcoin ETFs on Jan 10.
The current price is significantly lower than the record high of $69,044.77 on Nov 10, 2021.
Bitcoin prices rose last year as other cryptocurrencies also recovered and the overall market capitalisation more than doubled to $1.6 trillion. The Bitcoin price rose more than 150% from $16,000 to $43,000 by the end of the year.
According to Udomsak Rakwongwan, a researcher in the Mathematics Department at Kasetsart University and a founder of FWX, a decentralised finance (DeFi) platform for derivatives markets and cryptocurrencies, 2024 should offer growth for the cryptocurrency market as many people believe it could spark a bull run.
What events should we keep an eye on?
EMERGING ETFs
A Bitcoin ETF is a type of fund where its price follows the Bitcoin price and can be traded on regular exchanges. The US SEC's approval means investors concerned about restrictions can now invest in Bitcoin through ETFs.
This could create new investment opportunities and draw huge flows into Bitcoin trade.
Analysts said as more traditional investors hold Bitcoin, liquidity in the cryptocurrency market will surge, making the price less volatile.
ETFs can also attract more institutional investors to Bitcoin, as they are now regulated products on major US exchanges.
The 11 spot Bitcoin ETFs approved for US exchanges are as follows:
1. ARK 21Shares Bitcoin ETF
ARK Invest founder and chief investment officer Cathie Wood has been a long-time supporter of Bitcoin, and now her firm has its own Bitcoin ETF. ARK Invest is best known for its actively managed, tech-focused funds like the ARK Innovation ETF (ARKK).
ARK features a reasonable expense ratio of 0.21%, cheaper than that of many of its competitors. It also waives fees for the first six months or on the first $1 billion of assets invested, whichever comes first. ARK Invest's fund is traded on the Chicago Board Options Exchange (CBOE).
2. Bitwise's Bitcoin ETP Trust
Like ARKB, BITB is reasonably priced, with a fee of 0.20%, and fund sponsor Bitwise also waives the fee for the first six months or for the first $1 billion in investments it accrues, whichever comes first.
As the asset manager, Bitwise offers a number of additional crypto-related ETFs, including the Bitwise 10 Crypto Index Fund, which invests in an index of the top 10 cryptocurrencies by market cap, the Bitwise Crypto Industry Innovators ETF, as well as other funds related to Bitcoin and Ethereum futures.
3. Fidelity Wise Origin Bitcoin Trust
FBTC is the offering from asset management giant Fidelity, which already allows customers to buy Bitcoin and Ethereum in their brokerage accounts. FBTC is traded on the CBOE and carries a moderate expense ratio of 0.25%. The fee is waived until July 31, 2024.
4. Franklin Bitcoin ETF (EZBC)
Offered by Franklin Templeton, EZBC is traded on the CBOE and charges a moderate 0.29% expense ratio, although there is no fee waiver.
5. Grayscale Bitcoin Trust (GBTC)
GBTC is not a new offering. It launched as a trust in 2013. However, Grayscale is now converting this trust into an ETF and already has a market cap of $28 billion.
Although it deserves credit for being early to the game, GBTC's expense ratio of 1.5% makes it hard to recommend considering the more cost-effective options.
6. Hashdex Bitcoin ETF (DEFI)
DEFI is traded on the New York Stock Exchange (NYSE) with an expense ratio of 0.90%. It is an offering from Brazil's Hashdex, a crypto-native asset manager that offers a large number of crypto-related funds internationally.
7. Invesco Galaxy Bitcoin ETF (BTCO)
BTCO is offered by traditional asset manager Invesco and digital asset management firm Galaxy Digital Holdings. It is traded on the CBOE and charges a 0.39% fee, though the fee is waived for the first six months or the first $5 billion in assets under management (AUM).
8. iShares Bitcoin Trust (IBIT)
IBIT is the ETF that really set off the entire spot Bitcoin ETF frenzy when news broke that BlackRock, the world's largest asset manager, applied for a licence. After this filing, many other firms scrambled to apply.
IBIT charges an expense ratio of 0.12% for the first year or the first $5 billion in AUM, whichever comes first, after which the fee rises to a still-reasonable 0.25%.
9. Valkyrie Bitcoin Fund (BRRR)
BRRR trades on the Nasdaq and Valkyrie charges no fee for the first three months, then 0.49% after that. Valkyrie has several other Bitcoin-related funds, including the Bitcoin Miners ETF, and several other products related to Bitcoin, Ethereum and other cryptocurrencies.
10. VanEck Bitcoin Trust (HODL)
VanEck has experience in cryptocurrency with products like its VanEck Digital Transformation ETF and Bitcoin mining ETF, which recently closed down. HODL trades on the CBOE with a fee of 0.25%.
11. WisdomTree Bitcoin Trust (BTCW)
Charging a fee of 0.3%, BTCW trades on the CBOE. The fee is waived for the first six months or the first $1 billion in AUM.
FUTURE PROSPECTS
Investors can buy and hold their own Bitcoin ETFs directly, either through a crypto exchange such as Coinbase or more traditional platforms like Fidelity or Interactive Brokers, without paying any management fees (although transaction fees may still apply).
For investors who don't feel comfortable doing this, the ETFs discussed above are legitimate options to gain exposure to the largest cryptocurrency by market cap.
As Bitcoin ETFs gain popularity around the world, the Thai SEC currently allows only institutional investors and high net worth (HNW) investors to invest in them through securities companies.
Retail investors are recommended to invest in Bitcoin through domestic digital asset exchanges that are licensed by the SEC because of risk exposure.
InnovestX Securities, a unit of SCB X Group, is among the securities companies allowed to offer spot Bitcoin ETF trading to institutional and HNW investors after a recent discussion with the Thai SEC, according to information on the company's website.
"The SEC is concerned about limited investment understanding among retail investors who may rush to invest in digital assets," said Anek Yooyuen, deputy secretary-general of the SEC.
The US and Thai stock markets have different environments, said Mr Anek.
"We would like to see spot Bitcoin ETFs develop for a while, which is why we are barring retail investment," he said.
Jirayut Srupsrisopa, founder and group chief executive of Bitkub Capital Group Holdings Co, said the establishment of 11 Bitcoin ETFs marks an important step in the cryptocurrency industry by making it easier for the public to invest.
The move elevates the importance of Bitcoin, which for more than 10 years was perceived as an intangible asset, to be the first international digital commodity that can be assessed by a majority of investors through stock exchanges all over the world, he said.
HALVING PHENOMENON
One of the most pivotal events for Bitcoin's blockchain is a halving, when the reward for mining is cut in half. The next halving is expected to occur in early or mid-2024.
According to past statistics, during a four-year halving, the price of Bitcoin is divided into three periods, starting with the bull run period, where the price rises substantially, lasting roughly 1.5 years.
Then comes the bear market where the market falls rapidly and heavily for about one year.
The last period is called sideways up, in which the market fluctuates up and down, but towards an uptrend.
"We are now in the final phase of the halving cycle before entering a new halving this year," said Mr Jirayut, adding the fourth Bitcoin halving this April is supported by the launch of spot Bitcoin ETFs drawing money into the digital asset market.
"From my experience of more than a decade in this industry, everything will rotate in a cycle," he said.
"When the cycle is completed, the market will be active again. But the upcoming Bitcoin halving will have additional support as institutional money flows into Bitcoin trade following the US SEC approval of Bitcoin ETFs."
TRENDS & STRATEGIES
Sanjay Popli, chief executive of Cryptomind Advisory, expects large institutional investors to put their money in spot Bitcoin ETFs.
Two days after their launch, roughly $800 million worth of capital flowed into spot Bitcoin ETFs.
"We expect by the end of 2024, we will see investments from institutional investors topping $10 billion," he said.
Also supporting Bitcoin ETF investment is the expectation the US Federal Reserve will begin to cut interest rates.
By year-end, Bitcoin prices have the chance to reach $80,000-100,000, up from $42,000-43,000 at the moment, said Mr Sanjay.
In terms of the Bitcoin price trend for 3-5 years, he said investors must follow the inflation cycle, the Fed's interest rate policy, and the results of the US presidential election late this year.
If the incumbent Joe Biden is re-elected, it may affect the Bitcoin price because there current policies do not support Bitcoin investment, said Mr Sanjay.
If the Republican Donald Trump wins the election, it would push up the Bitcoin price in the long run because of more supportive policies, he said, adding investors need to follow economic trends to see whether the US enters a recession.
Regarding investment strategies, Mr Sanjay recommends higher investments in Ethereum and related coins compared with 2023.
Some money should shift from Bitcoin to Ethereum based on the expectation the latter will be approved for ETF trading by the US regulator, he said.
Ethereum prices are estimated to have bottomed out and could reach $6,000-8,000 by year-end, compared with only $2,500-2,600 at present, said Mr Sanjay.