Bitcoin has fully recovered from its 2021-22 downturn, reaching a new all-time high in March 2024. Grayscale Research suggests that central banks rushing to cut interest rates may be driving demand for alternative value stores like physical gold and Bitcoin.
Key Market Developments
- Bitcoin's Remarkable Recovery: Regained its previous peak in just over two years—faster than previous cycles (Chart 1).
- Ethereum's Network Upgrade: The "Dencun" upgrade reduced Layer 2 transaction fees to <$0.01, though ETH underperformed BTC due to lower expectations for US spot ETF approval.
- Bitcoin Halving (April 19): Will cut daily issuance from ~900 BTC to ~450 BTC, highlighting Bitcoin's predictable monetary policy vs. fiat currency uncertainty.
Market Performance Analysis
Asset Class Comparison
- Bitcoin outperformed traditional assets in March (Chart 2), while Ethereum's returns aligned with mid-range performers.
- Top traditional performers included physical gold, non-US developed market stocks, and energy equities.
👉 Discover how Bitcoin ETF inflows outpace network issuance
Macroeconomic Drivers
Central banks signaled impending rate cuts, with most G10 economies (excluding Japan) expected to reduce rates within a year. This:
- Boosted inflation expectations (Chart 3)
- Increased demand for inflation-resistant assets like Bitcoin and gold
Bitcoin ETF Dynamics
- US spot Bitcoin ETFs saw $4.6B net inflows in March (down from $6B in February).
- ETFs purchased ~2,100 BTC daily vs. network issuance of ~900 BTC/day (Chart 4). Post-halving, issuance drops to ~450 BTC/day.
Ethereum's Challenges
Despite its successful upgrade:
- ETH/BTC ratio fell to January lows (Chart 5).
- Polymarket data shows US spot ETH ETF approval odds dropped from 80% to 21%.
Crypto Sector Highlights
- Consumer & Culture: Led by meme coins (+30% in March), though these remain high-risk (Chart 6).
- Finance: Tokens like BNB and THORChain (RUNE) gained from Bitcoin ecosystem growth.
FAQs
Q: Why did Bitcoin recover faster this cycle?
A: Institutional adoption (via ETFs) and macroeconomic uncertainty accelerated demand.
Q: How does the halving affect Bitcoin's value?
A: Reduced supply—if demand stays constant—historically precedes price appreciation.
Q: Will Ethereum's upgrade improve its price?
A: Long-term yes, but short-term ETF approval concerns may limit gains.
👉 Explore Bitcoin's scarcity mechanics post-halving
Conclusion
Grayscale positions Bitcoin in the "middle innings" of its bull run, with the halving reinforcing its scarce digital asset narrative amid fiat currency uncertainties. Investors should watch:
- ETF flow trends
- Macro policy shifts
- Post-halving supply impact