Bitcoin’s rise to $31K caps eventful first 6 months of 2023
As asset’s price ascends, on-chain custody solution CEO says industry likely “won’t see the real fireworks” until bitcoin’s next halving
Wit Olszewski/Shutterstock modified by Blockworks
Bitcoin eclipsed $31,300 on Monday — a level that caps off the first six months of 2023, leaving the asset up roughly 89% on the year.
A 2%-plus bump on the day followed a confluence of various bullish factors for bitcoin (BTC) — from a banking crisis to an institutional adoption narrative that has more recently come in the form of spot bitcoin ETF applications.
The collapse of crypto exchange FTX created a lot of “forced selling” that likely would not have happened otherwise — creating a market bottom of sorts, according to Andrew Lawrence, co-founder and CEO of on-chain custody solution Censo Inc.
“So, to some extent, the rise of BTC since then is partly related to something of a mean reversion,” he told Blockworks.
But more than that, a series of banking failures that began in March sparked concern around deposit safety. Some, Lawrence said, turned to bitcoin as a “bearer-asset hedge.”
Read more: Banking sector stumbles are boon for DeFi
Participation in the asset class by some of the largest names in financial services has also contributed to a broader institutional adoption narrative that has been bullish, industry watchers say.
Roman Regelman, chief executive of BNY Mellon’s asset-servicing and digital businesses, said in May that America’s oldest bank would expand its services to include custody and clearing for digital assets.
The executive at the time said BNY Mellon would use blockchain technology to modernize its infrastructure, as well as explore tokenization.
Crypto exchange EDX Markets launched last month with the backing of Citadel Securities, Fidelity Digital Assets and Charles Schwab.
The launch came around the same time that Deutsche Bank applied to Germany’s financial regulator to provide crypto custody services. The EU Parliament passed the Markets in Crypto Assets (MiCA) regulation in April.
Read more: TradFi firms wading deeper into crypto waters despite regulatory uncertainty
Also in June, BlackRock, with $9 trillion in assets under management, decided to try to launch a spot bitcoin ETF for the first time. This spurred other fund issuers — including Fidelity Investments, Invesco and WisdomTree — to renew quests for a spot bitcoin ETF.
The SEC has never allowed such a product to come to market, despite scores of attempts over the past decade.
Bitcoin rose more than 15% in the week following BlackRock’s filing, Fineqia International research analyst Matteo Greco wrote in a June 27 research note — going above $31,000 on June 23.
But another upcoming event could prove more influential to bitcoin’s price, industry watchers said.
“I suspect…we won’t see the real fireworks that we’re used to seeing in this industry until the next bitcoin halving, which will likely kick in during the second quarter of next year,” Lawrence said.
The halving — when rewards for mining new blocks gets cut in two — happens every 210,000 blocks, or roughly four years. The next bitcoin halving is set for April 2024.
“The months prior to the halving have historically seen the start of a bullish trend for the market,” Greco told Blockworks in an email. “Hence the market participants are carefully looking at the second half of 2023.”
Get the news in your inbox. Explore Blockworks newsletters:
- The Breakdown: Decoding crypto and the markets. Daily.
- 0xResearch: Alpha in your inbox. Think like an analyst.
