In January 2024, several Bitcoin ETFs finally received approval from the U.S. Securities and Exchange Commission. This is seen as the most significant move since the launch of Bitcoin. The floodgates for institutional investors have finally opened...... However, when the floodgates opened, there were no investors flocking to it. The lukewarm response from investors has taken the crypto community by surprise, but not everyone. Some of us expected this.

Why did Bitcoin stay still when the ETF was approved?

No one knows the whole picture, so all we can do is speculate based on a small piece of the entire puzzle. There is a possible theory that explains Bitcoin's rally, its current stagnation, and its future trajectory.

Why didn't Bitcoin rise after ETF approval? Because Bitcoin's institutional funds may have been priced in.

In October 2023, Bitcoin jumped from a stagnant range of $26,000 to $34,000 and then to $44,000 shortly thereafter. Whose money is buying these bitcoins?

Before the Bitcoin rally began, there were already 11 Bitcoin ETF applications. Some of the world's largest investment fund managers are keeping an eye on the development of cryptocurrencies, and there are rumors of approval by the U.S. Securities and Exchange Commission (SEC).

Obviously, BlackRock and 10 other companies will soon need to have enough Bitcoin to match their orders, and what better time to buy than at $26,000?

Bitcoin's rally is higher than the wave. The mainstream media barely reported the 69% increase, but was busy tracking the war and American politics. This rally is a bit different: we've seen hype and small swings before, but this time it's a big move without any hype.

When Bitcoin exceeded $40,000, the risk of return reached a clear tipping point, and buy orders gradually disappeared, leaving only minor retail volatility. This sets the stage for the upcoming ETF approval.

Before we dive into this possible explanation, let's ask a simple question: If you were a billionaire, would you be willing to be the first investor to test a Bitcoin ETF?

What can upset the balance?

It's a standoff. For the first time ever, retail traders, institutional funds, and ETF managers are sitting at the same table. No one wants to show their hand first, but that's about to change. And here's a surprising coincidence: we're only a few months away from the fourth Bitcoin halving.

The next halving is expected to take place around April 2024, when the mining reward for new blocks will drop from 6.25 BTC to 3.125 BTC. Halving is a built-in feature in the Bitcoin protocol designed to control the supply of cryptocurrencies, making them more scarce. In other words, it is a mechanism to increase the price.

Reward halving occurs approximately every four years, historically leading to significant price spikes. Let's look at the last three Bitcoin halvings and how the price reacted:

During the first halving (November 28, 2012), the price jumped from $12 to $1,242.

During the second halving (July 9, 2016), the price soared from $641 to $20,089.

During the third halving (May 11, 2020), the price soared from $8,246 to $68,789.

With that in mind, here is a very basic hypothetical example of what might happen next.

Rocky had $100,000 in fiat currency and bought a bitcoin from the exchange for $26,000.

Rocky then privately sold Bitcoin to a friend for $44,000. Rocky now has $118,000 in fiat currency and no Bitcoin holdings, making $18,000.

But what if Bitcoin rises to $62,000 and this friend sells the Bitcoin ETF back? Rocky would lose $18,000. Is it breaking even? Not exactly.

The official website of exness Chinese believes that Rocky is worth $56,000 in fiat currency and $62,000 in Bitcoin, with a net worth of $118,000. However, Bitcoin is still not legal tender, and the final tally can only be made when all assets have been returned. Still, the seemingly loss-making trade ended up being profitable.

What would you do if your customer was ready to buy a truckload of Bitcoin for $44,000 and you knew it would go above $62,000? You may buy more Bitcoin for yourself.

This brings us back to the possibility at the beginning: what if the recent Bitcoin rally was due to ETF Bitcoin purchases covering more than half of Bitcoin ETF trading volume? In this case, the ETF manager will also profit from holding a large amount of Bitcoin.

Whatever happens, anyone who buys and holds Bitcoin in the $26,000 range could soon have a very good day – just a possibility.

The Exness platform believes that no one knows how Bitcoin will play out in the coming weeks, and if anyone does, it is certain that they will not say either. This article describes just one of the many possibilities that await Bitcoin traders in 2024. It's all full of uncertainty, which is probably the biggest reason why Bitcoin's price hasn't surged yet.

It's safe to assume that Bitcoin trading volume will be very active once the halving party begins, and as a trader, you'll not only be able to witness it all, but also participate in it. It will indeed be an exciting time.

The next Bitcoin halving is expected to take place around April 2024, but the exact date is not yet known as it depends on how quickly new blocks are mined. What you need to make sure is that you have enough assets, realistic and careful leverage settings, and a will of steel.