What’s holding back bitcoin?

By Paul Reid

07 February 2024

3118 bitcoin

In January 2024, at long last, multiple bitcoin ETFs were approved by the US Securities and Exchange Commission. It’s been called the most significant move in bitcoin history since its inception. The floodgates finally opened for institutional investors…and then, nothing happened. Their lackluster response was a huge shock to the crypto community, but not to all of us. Some of us were expecting it.

Why didn’t bitcoin react when the ETF was approved? 

Nobody knows the whole picture, so the best we can do is speculate based on small pieces of the puzzle. Here’s one possible narrative explaining the last rally, the current stagnation, and what will come.

Why didn’t bitcoin rise after the ETF was approved? Because bitcoin institutional money was probably already priced in.

In October 2023, bitcoin leaped out of a very stagnant $26k range up to $34k, and then on to $44k shortly after. Who’s money was buying those bitcoins?

Before the rally began, there were already 11 applications for a bitcoin ETF. Some of the largest investment fund managers in the world had a stake in the evolution of crypto, and whispers of SEC approval were in the wind.

Obviously, BlackRock and the other 10 companies would soon need to own enough bitcoin to match their incoming orders, and what better time to buy than at $26k?

The rally ramped up. Mainstream media barely mentioned the 69% rise — too busy chasing war and US politics. Something was different about this rally: we’d seen big hypes and small moves before, but this was a huge move with no hype whatsoever.

As bitcoin passed $40k, the risk on return hit a clear tipping point, and Buy orders faded, leaving only minor retail volatility. The stage was set for the coming ETF adoption.

Before we get too deep into this possible narrative, here’s a simple question: if you were a billionaire, would you want to be the first investor to test bitcoin ETFs?

What will break the equilibrium?

This is a standoff. Retail traders, institutional money, and ETF managers are all at the same table for the first time in history. Nobody wants to show their hand first, but that’s all about to change. What timing and what a coincidence: the 4th bitcoin halving is just months away.

This next halving is expected around April 2024, when the reward for mining new blocks will be split from 6.25 BTC to 3.125 BTC. Halvings are a built-in feature of the bitcoin protocol designed to control the cryptocurrency’s supply — and make it more scarce. In other words, it’s a mechanism for raising the price.

Halvings occur approximately every four years and are followed historically by significant price increases. Look at the last three bitcoin splits and how the price reacted:

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

  • The second halving (9 July 2016) drove it from $641 to $20,089.

  • And again, for the third halving (11 May 2020) prices rocketed from $8,246 to $68,789.

Given all that, here’s a very basic hypothetical example of how this might go down next time.

Rocky has $100k in fiat currency. He buys a bitcoin at $26k from an exchange.

Rocky then privately sells the bitcoin to a friend for $44k. Rocky now has $118k in fiat currency and no bitcoin. He gained $18k.

But what if bitcoin hits $62k and the friend sells the bitcoin ETF back? Rocky loses $18k. Break even? Not exactly.

Rocky’s worth is now $56k in fiat currency, alongside $62k in bitcoin, netting him $118k. But bitcoin is still not fiat currency, and the final tally only happens when all assets are returned. Nevertheless, what appears to be a losing proposition turns out to be profitable.

What would you do, if your clients were about to buy a truckload of bitcoin at $44k, and you knew the price would rise above $62k? You might buy more bitcoin for yourself.

This brings us back to the original narrative: what if the recent rallies were ETF bitcoin acquisitions to cover more than half the bitcoin ETF trading volume? In that case, the ETF managers will also profit from holding an excess of bitcoin.

Whatever happens, anyone already holding bitcoin from the $26k range will probably have a very good day very soon — probably.


Nobody knows how the future of bitcoin will play out in the coming weeks, and if someone does, you can be sure they are keeping it to themselves. The narrative in this article is just one of so many possibilities that await bitcoin traders in 2024. It’s all so uncertain, probably the biggest reason bitcoin prices haven’t surged — yet.

You can be sure of some very dynamic bitcoin trading volumes once the halving party gets started, and you, as a trader, not only get to witness it, you get to participate in it. Exciting times indeed.

The next halving is expected to occur around April 2024; however, the exact date is as yet unknown, as it depends on the speed at which new blocks are mined. Just be sure you’ve got plenty of equity, a realistic and cautious leverage setting, and nerves of steel.

This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.


Paul Reid
Paul Reid

Paul Reid is a financial journalist dedicated to uncovering hidden fundamental connections that can give traders an advantage. Focusing primarily on the stock market, Paul's instincts for identifying major company shifts is well established from following the financial markets for over a decade.