Back in mid-March, Bitcoin (CRYPTO: BTC) hit an all-time high of $73,750, and it seemed the sky was the limit. But a lot has happened since then, and Bitcoin currently trades at less than $64,000. Although Bitcoin may still be up 45% for the year, the past six months have been disappointing, to say the least.
So is it time to sell? Not at all. If you take a long-term perspective, Bitcoin's upside potential remains unmatched among major cryptocurrencies. But that doesn't mean that concern isn't warranted.
What happens next with the Bitcoin ETFs?
More than $30 billion has already flowed into the new spot Bitcoin exchange-traded funds (ETFs) since the start of the year, and as long as people keep investing in them, the thinking goes, Bitcoin has nowhere to go but up. No wonder it had such a meteoric ascent during the first three months of the year, when investor inflows were positive every day.
But investor inflows started to slow during the summer and finally came to a screeching halt in August after the so-called crypto flash crash. Briefly, investor inflows turned negative. That was a definite warning signal that Bitcoin ETF inflows could stop at a moment's notice, and that's what has me so concerned.
Image source: Getty Images.
Moreover, if you drill down into the numbers to see who's buying the new Bitcoin ETFs, you will still not see the broad-based institutional buying that many expected at the beginning of the year. For example, some of the biggest buyers have been hedge funds and quantitative trading firms. That's not exactly long-term, buy-and-hold money. If Bitcoin has a prolonged slump, this is money that could exit very quickly.
It would be reassuring to know that big pension funds and other risk-averse institutional buyers were getting into the act. I'm keeping my ear low to the ground for news that big pension funds, endowments, or sovereign wealth funds are making big moves into Bitcoin via the new spot ETFs. If that happens, I'll be much more confident in the ETF investment thesis heading into 2025.
The Bitcoin halving has been a dud
Thus far, the Bitcoin halving has been a big fat zero. The event, which took place on April 19, was supposed to send the price of Bitcoin skyrocketing. But that simply has not happened. In mid-April, Bitcoin was trading near $64,000. Nearly six months later, it's still trading near $64,000.
This is very concerning, because the Bitcoin halving cycle has historically been one of the fundamental catalysts for Bitcoin price appreciation. Every four years, Bitcoin has a new halving, and every four years, Bitcoin hits a new all-time high. This has happened three times: in 2012, 2016, and 2020.
Granted, there's still time for it to happen again with this halving. Usually, it takes a few months for the Bitcoin halving to take effect. But it's now October, and we've been saying this for nearly six months. As Yankees great Yogi Berra would say, "It's getting late early."
The "crypto election" might fail
During the summer, there was much fanfare about this becoming the first-ever presidential election in which crypto had emerged as a viable campaign issue. And yes, the initial signs were very promising. Former President Donald Trump led the way, promising to turn America into the "crypto capital of the world," and he even showed up in person at the Bitcoin 2024 event in Nashville, Tennessee, to give a keynote speech.
The good news is that other politicians on both sides of the aisle have taken up this pro-crypto rallying cry. Most noticeably, Vice President Kamala Harris has attempted to soften the perceived anti-crypto approach of the Biden administration with campaign promises for the Bitcoin faithful.
But there's always a chance that the crypto election might not pan out. In such a partisan political environment, how much is really going to get done in Washington once the election is over? There are surely bigger priorities in America right now than Bitcoin, and campaign promises have a way of disappearing once the votes are in. If you're counting on the November election to spark a major Bitcoin rally, prepare to be disappointed.
Where is Bitcoin headed next?
I'm still bullish long-term on Bitcoin. By all accounts, the new Bitcoin ETFs continue to be a huge overall success. And there's still reason to think that the residual effects of the 2024 Bitcoin halving are yet to come. And the crypto election might turn out to be a huge win for Bitcoin investors.
But while a price of $100,000 is certainly within reach for Bitcoin this year, I'm becoming much more skeptical about all those sky-high million-dollar forecasts that proliferated at the start of the year.
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Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy .
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