In a new report published by VanEck, one of the operators of the Bitcoin Spot ETF product, the company examines the current state of BTC miners and the potential opportunities ahead.
Despite an initial 20% drop following the launch of Bitcoin ETFs, BTC has managed to recover and is trending positive year-to-date (YTD) as of January 29. However, most Bitcoin miners are still down 20% year-to-date.
The recent launch of multiple spot Bitcoin ETFs has had a dual impact on the asset, according to VanEck analysts. On the one hand, by expanding access to Bitcoin, they have enabled a broader range of investors to participate without the need for direct digital asset ownership. On the other hand, this created a headwind for the BTC price due to increased market liquidity and one-way investor sentiment heading into the event.
According to the report, historically, there has been a strong correlation between the price of Bitcoin and the valuations of BTC mining companies. Bull market cycles in Bitcoin typically provide a tailwind for mining companies, as their margins increase for each coin mined. However, when prices fall, the opposite is true, leading to more limited profitability.
According to analysts, the Bitcoin halving, which is likely to occur around April 20, is a very important event. Previous halvings in 2012, 2016, and 2020 were preceded by significant bull rallies in BTC's price as Bitcoin's new supply was reduced by 50%. After the halving in 2016, the price of Bitcoin increased from $ 650 to approximately $ 20,000 at the end of 2017. Similarly, after the 2020 halving, BTC rose from around $8,800 to an all-time high of $69,000 in November 2021.
According to analysts, this historical pattern indicates that the halving could lead to a decrease in supply and potential price increase.
*This is not investment advice.