In a recent report by VanEck, a key player in the Bitcoin Spot ETF market, the current state of BTC miners is examined along with the potential opportunities on the horizon.
Despite an initial 20% drop following the introduction of Bitcoin ETFs, BTC has made a significant recovery and is showing positive trends year-to-date as of January 29. However, most Bitcoin miners are still down 20% year-to-date.
The introduction of multiple spot Bitcoin ETFs has had a dual impact on the asset, according to VanEck analysts. On one hand, it has broadened access to Bitcoin, allowing a wider array of investors to participate without direct ownership of the digital asset. On the other hand, this has created a headwind for the BTC price due to increased market liquidity and one-way investor sentiment leading into the event.
The report points out a strong historical correlation between the price of Bitcoin and the valuations of BTC mining companies. Bull market cycles in Bitcoin typically yield increased margins for mining companies as the price goes up. Conversely, when prices fall, profitability becomes more limited.
The upcoming Bitcoin halving, expected around April 20, is highlighted as a crucial event. Past halvings in 2012, 2016, and 2020 were followed by significant bull rallies in BTC’s price as the new supply of Bitcoin was reduced by 50%. After the halving in 2016, the price of Bitcoin skyrocketed from $650 to around $20,000 at the end of 2017. Similarly, following the 2020 halving, BTC surged from approximately $8,800 to an all-time high of $69,000 in November 2021.
Analysts believe that this historical pattern suggests the upcoming halving could lead to a decrease in supply and a potential price increase.
*This information does not constitute investment advice.
