Bitcoin is approaching a crucial moment as investors closely watch if historical patterns will repeat. Nearly six months have passed since the fourth Bitcoin halving, and Hashdex Research indicates that Bitcoin is nearing a pivotal stage. Historically, after a long consolidation, prices may rise. Key influences on this potential shift include recent interest rate cuts by major central banks, such as the Federal Reserve's 50 basis points reduction, China's monetary easing and stimulus measures, and the upcoming U.S. presidential election. These factors could create a favorable environment for a surge, similar to past halving cycles when prices rose significantly months post-event.
By the end of the third quarter, the crypto market's volatility was relatively stable, with Bitcoin's volatility below 50%, and Ethereum and Solana at similar levels. This lower volatility marks the industry's maturity, though temporary spikes occurred, such as early August's yen arbitrage trades closing. As the fourth quarter of 2024 begins, overall crypto volatility is expected to increase, especially if prices start moving positively. Hashdex Research notes continued Bitcoin accumulation by investors. In the third quarter, Bitcoin's price ranged from $54,000 to $69,000, and its market dominance strengthened to 54% of the digital asset market by year-end.
Bitcoin's recovery so far in 2024 has been positive, rising 5.3% in July due to optimism over a potential Ethereum ETF approval and renewed confidence in crypto-supportive Trump's election prospects. However, momentum faltered in August when the Bank of Japan's surprise rate hike led to a broad sell-off of major asset classes, causing Bitcoin to drop 10%. September started with bearish sentiments as confidence in a Trump victory waned, and U.S. employment data hinted at a recession. However, mid-September saw a shift, boosting investor optimism and aiding Bitcoin's recovery. The cryptocurrency gained 8% by month-end, achieving a 2.5% total return for the quarter. Recently, Bitcoin has appreciated over 5% and is now trading above $65,650.
Regarding spot ETFs, notable attention is on BlackRock's foray into Bitcoin, pivotal for the crypto sector. In January, the firm launched a spot Bitcoin ETF, pushing the cryptocurrency's price to a historic high. In July, they expanded their digital asset portfolio with a spot Ethereum ETF, which, though attracted moderate inflows compared to Bitcoin, was deemed a modest success by the company.
BlackRock CEO Larry Fink regards Bitcoin (BTC, Financial) as an asset class, likening its investment potential to gold. He stressed that liquidity and transparency are key to the market's evolution, likening the state of virtual assets to the $11 trillion mortgage market. As more data and analysis become available, he sees potential growth. Fink also discussed digital currencies' future roles, highlighting the digital dollar's potential and success stories in India and Brazil.
Fink believes artificial intelligence and improved data analytics will drive market expansion and acceptance of digital assets. His remarks coincided with a strong inflow into spot Bitcoin ETFs, with October 14 marking one of the top-performing days since their January debut. Data from Farside Investors showed spot Bitcoin ETFs attracted $555.9 million the day alone. BlackRock's IBIT ETF saw $79.5 million inflow, second to Fidelity's FBTC ($239.3 million) and Bitwise's BITB ($101.1 million).
