Bitcoin’s bizarre hike renewed enthusiasm last quarter! What does the future hold for investors?

Bitcoin’s bizarre hike renewed enthusiasm last quarter! What does the future hold for investors?
In the ever-evolving landscape of finance, few phenomena have captured the imagination and attention of investors like Bitcoin. Whenever new-age ‘finfluencers’ hailed the arrival of this supposedly futuristic digital gold, it came crashing down like a house of cards. And as another set of ‘experts’ prepared to write the obituary for the crypto bubble, its rollercoaster journey usually made a thunderous comeback.

But the one thing Bitcoin has not done, at least in the last one and a half decades, is become irrelevant despite repeated attacks of being a scam, a bubble, or a digital tulip mania. In fact, of late, it has taken an even more legitimised position as a ‘serious’ asset as the US Securities Exchange Commission (SEC) approved the spot bitcoin exchange-traded funds (ETFs) earlier this year.

“The recent approval of Bitcoin ETFs in the US has sparked a significant rally in the crypto markets worldwide. This development has been closely watched in India, where the crypto market has been experiencing a surge in interest and activity,” says Balaji Srihari, Business Head at CoinSwitch.

Doubling before halving

Bitcoin's journey has been nothing short of extraordinary. Launched in 2009 by the enigmatic Satoshi Nakamoto, its core principles – decentralisation, security, and limited supply – resonated with a growing number of investors over the past one and a half decades. Today, Bitcoin is no longer a digital outcast, with major financial institutions like BlackRock and Goldman Sachs dipping their toes into the crypto pool.

Last month, Bitcoin soared to unprecedented heights again, touching an all-time high of $73,000 or ₹60.5 Lakhs on March 13. As of April 15, the digital asset stands at ₹54.4 Lakhs — 10% below its peak value.


“Institutional investors made the most of the last financial year by bolstering their presence in the crypto space through different initiatives that support Fiat integration, blockchain-based solutions, as well as funds dedicated to crypto. The launch of ETFs — made possible by advocacy initiatives — ensured that the crypto market gets a strong finish with Bitcoin prices crossing its all-time high,” explains Rajagopal Menon, VP at WazirX.

So, what do retail investors need to know as Bitcoin continues to redefine the notion of modern investing? Three major factors will define the path for Bitcoin in FY 2024-25: elections across major economies, ongoing geo-political conflicts, and the upcoming halving event later this week!

Read: Fervent Bitcoin trading approaches fresh supply crunch; Here’s what this week’s ‘halving’ event implies

The last factor has been discussed in detail in the article above, but to cut the story short, Bitcoin halving involves reducing the reward miners receive for validating transactions by half. This feature is hard-coded in the base protocol to control the supply with time, and it happens once every four years — and is scheduled to take place by April 20 this year.

Renewed enthusiasm in Indian crypto market

The recent surge sparked fresh enthusiasm in the market, and investors from India were not behind. India spearheaded the G20 summit and declared a crypto regulatory framework for all nations in the group to be mandated by 2025. Despite regulatory hurdles like ultra-high taxation, Indian retail investors have been flocking to the crypto market yet again, driven by the growing involvement of institutional investors and the anticipation of Bitcoin Halving.

“On Coinswitch, we are seeing our best quarter in nearly two years, with higher trades and user registrations. In the first quarter of 2024 alone, our BTC trading volume surged by 220%, outpacing even our global peers,” beamed Srihari as Coinswitch became the first crypto platform to reach 2 crore users last month.

Menon also forecasts a bright future for the Indian crypto market. “The next financial year will be quite promising for crypto with Bitcoin halving ensuring a surge in prices, with demand-supply dynamics being a key lever. India will witness a greater adoption rate for virtual digital assets with increased liquidity in the market. The Web3 startup funding will also see some uptick. However, it might not be as generous as the last bull run,” he says.

The sharp price surge and growing retail investor interest, however, reignited the debate about Bitcoin's true nature: revolutionary asset class or a volatile gamble?

Future remains uncertain despite positive indicators

In the past, Bitcoin halving has always been followed by a sharp upward surge due to reduced supply, but this year, many other factors are at play. However, it is worth noting that almost all such rallies also coincided with larger macroeconomic trends like the European debt crisis in 2012, the crypto world seeing the initial coin offering (ICO) boom in 2016, and the COVID-19 pandemic and unprecedented quantitative easing that followed in 2020. All these events contributed to heightened interest in Bitcoin during respective years.

Bitcoin’s bizarre hike renewed enthusiasm last quarter! What does the future hold for investors?
Source: CoinSwitch Research

This year, macroeconomic factors like dropping inflation levels, possible continuation of the governing regime, and the rise of Bitcoin-related ETFs across the globe, point to a possible surge.

“Major economies like India and the USA are headed for their respective elections, which could be pivotal for their market prospects as well as Bitcoin prices. This could lead to some turbulence in prices in the crypto market. However, with the demand-supply dynamics of Bitcoin poised to undergo a major overhaul (due to halving), prices could see a significant surge. Additionally, the Fed is expected to cut interest rates by 75 bps by the end of this year, and again in the following two years, which will boost liquidity in the market. This has usually been beneficial for crypto investors who take this as a cue for flocking to assets such as crypto,” opines Menon.

But the ongoing geo-political tensions can play a huge role in determining the path forward for Bitcoin. Between January and June of 2022, the Russia-Ukraine conflict was among the major factors that led to an over 50% drop in Bitcoin prices, reinforcing a crypto winter like never before. Similarly, an escalation of the Israel-Palestine-Iran conflict could trigger a broader market panic, leading investors to flee riskier assets like Bitcoin.

However, the impact of the crisis is difficult to predict. With its limited supply and growing acceptance, Bitcoin could even be seen as a hedge similar to gold that investors trust as a safe-haven asset during geopolitical tensions. In such a scenario, if traditional markets falter due to the crisis, Bitcoin could see increased demand as an alternative store of value.

In a Deutsche Bank survey, 52% respondents expressed belief that cryptocurrencies will become an “important asset class and method of payment transactions” in the future, compared to 40% in September 2023. However, 33% of the respondents expect Bitcoin to fall to $20,000 — less than one-third of the current levels — while only 10% believe that the prices will cross $75,000 by the end of this year.

So, with Bitcoin scaling new heights and the halving looming, should you invest? The answer is, as always, be cautious! Bitcoin's recent surge and the upcoming halving create an exciting opportunity for investors with a strong stomach for volatility. However, potential investors must always consider and understand the risks involved while investing in such volatile assets and diversify investments across different asset classes to mitigate risk.

Disclaimer: The content on this website is for informational purposes only and should not be construed as investment advice. We recommend readers consult certified, qualified and registered advisors for professional and personalised financial advice.

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