the reasons for a spectacular rise – L’Express

This digital asset created in 2009 thus marks an unexpected 18 consecutive month increase, while bitcoin had fallen to $16,000 after the bankruptcy and fraud scandal of the FTX exchange platform, in November 2022. That is to say a jump of almost 145%. A craze for the digital currency largely linked to an upcoming announcement from the American financial markets regulator.

This increase would in fact be linked to “good news” from the United States, explains Claire Balva, independent consultant on cryptocurrencies for 7 years with large French companies listed on the stock exchange. Indeed, speculators expect that an investment fund indexed to bitcoin will be created in the coming months by the US federal financial markets regulator (SEC).

An index fund (designated by its English acronym ETF) which can, for example, rely on the value of raw materials, such as gold, but which does not yet exist for cryptocurrencies such as bitcoin. However, in the absence of an official fund approved by the SEC, “it is not always easy for individuals and companies to buy these assets”, specifies Claire Balva. But the commission could soon confirm the creation of this fund, since it lost an appeal trial at the end of October linked to its refusal to authorize an ETF fund on a cryptocurrency. It will therefore have to re-examine this request and process other similar files shortly.

“Many experts agree that the arrival of this fund should allow individuals and businesses to easily gain exposure to Bitcoin, […] especially for Americans,” adds the consultant. This could therefore cause an increase in demand for bitcoins, motivating speculators to buy more and more of this digital currency and causing the current explosion.

Claire Balva also points to another element to explain this spectacular increase. A “cyclical phenomenon for bitcoin […] which takes place every four years: the division by two of the monetary value”, says the cryptocurrency consultant.

Indeed, bitcoin is a digital currency generated by powerful computers, but which has a mathematical limit: “There will never be more than 21 million bitcoins” produced in total, recalls Claire Balva. From then on, the rate of production of these bitcoins gradually slows down, to the point of being “divided by two every four years”. A cyclical phenomenon which must occur again “mid-2024”, indicates the expert.

This event called “halving” thus produces a shock on the supply of bitcoins: “it’s as if suddenly, you divide it by two, you create a form of scarcity. […] I think that the markets expect this increase, and anticipate it, so for them, it is the right time to buy it,” analyzes Claire Balva.

Beyond these two positive phenomena, the cryptocurrency consultant tempers the enthusiasm of speculators: “The price of bitcoin is based on supply and demand. So we can see panic phenomena in this market, or “The opposite of euphoria. That’s why it can seem spectacular.”

Whether linked to a new American investment fund or a drop in bitcoin production, these increases in demand remain hypothetical. Even when this is the case, “these increases are countered quite quickly by a decrease,” warns Claire Balva. American media Bloomberg remember as well as “bitcoin had fallen 64% last year, after a 60% gain in 2021”. An “unpredictable” market, believes the cryptocurrency consultant, who nevertheless believes that the recent scandals and bankruptcies in the crypto world since spring 2022 have “led the sector to be more observed, and therefore more solid on these supports because There is no longer a choice.”

Claire Balva therefore expects “an upward trend over the next one to two years”, based in particular on the possible adoption of this digital currency by traditional finance. She believes that the largest digital currency has become “resilient to announcement effects” over time, unlike cryptocurrencies that are smaller in terms of capitalization and less used.