Bitcoin has been in the spotlight ever since the US SEC approved the first spot bitcoin ETFs in October 2023. The cryptocurrency has gained more than 50% since then, reaching a new all-time high of over $80,000 in January 2024. But what are the main drivers behind this bullish trend? And can it last? In this article, we will explore some of the key factors that are supporting the bitcoin bull case, such as ETF adoption, shifting flows, and macroeconomic trends.
ETF Adoption: A Game Changer for Bitcoin
One of the most significant events for bitcoin in 2023 was the approval of the first spot bitcoin ETFs by the US SEC. This marked a major milestone for the crypto industry, as it opened the door for more institutional and retail investors to access the digital asset class. ETFs are investment vehicles that track the performance of an underlying asset, such as a stock, a commodity, or a cryptocurrency. They offer several advantages over direct ownership, such as lower fees, higher liquidity, tax efficiency, and regulatory compliance.
According to data from ETF.com, there are currently four spot bitcoin ETFs trading in the US, with a combined assets under management (AUM) of over $6 billion. The largest and most popular one is the ProShares Bitcoin Strategy ETF (BITO), which has an AUM of $4.7 billion and an average daily volume of $1.2 billion. The other three are the Valkyrie Bitcoin Trust (BTF), the VanEck Bitcoin Trust (XBTF), and the Invesco Bitcoin Strategy Trust (BTC).
The launch of these ETFs has created a huge demand for bitcoin, as they have to buy and hold the underlying asset to match their NAV. According to Glassnode, the net inflow of bitcoin into ETFs since October 2023 is over 170,000 BTC, which represents about 3.3% of the total supply. This has reduced the amount of bitcoin available on the market, creating a supply squeeze that pushes the price higher.
Shifting Flows: From Gold to Bitcoin
Another factor that is boosting the bitcoin bull case is the shifting flows of capital from traditional safe-haven assets, such as gold, to bitcoin. Many investors see bitcoin as a better store of value and a hedge against inflation, especially in the current macroeconomic environment of low interest rates, high debt, and money printing. Bitcoin is also seen as a more innovative and disruptive asset, with a higher growth potential and a lower correlation to other markets.
The data shows that the ETF flows reflect this trend. According to Bloomberg, the bitcoin ETF flows in the first 14 days of trading were $1.7 billion, which was higher than the gold ETF flows of $1.3 billion in the same period. This suggests that some investors are switching from gold to bitcoin, or at least diversifying their portfolios with the new asset class. The gold price has also been underperforming compared to bitcoin, losing about 10% in 2023, while bitcoin gained more than 300%.
Macroeconomic Trends: A Favorable Backdrop for Bitcoin
The third factor that is supporting the bitcoin bull case is the macroeconomic trends that are creating a favorable backdrop for the cryptocurrency. Some of the key trends are:
- The Federal Reserve’s announcement to taper its bond-buying program and raise interest rates in 2024. This is expected to increase the volatility and uncertainty in the financial markets, as well as the inflation expectations. This could benefit bitcoin, as it is seen as a hedge against inflation and a non-correlated asset that can perform well in times of market stress.
- China’s decision to print more money and ease its monetary policy to stimulate its economy. This could increase the liquidity and demand for risky assets, such as bitcoin, as well as weaken the Chinese yuan and the US dollar. Bitcoin is also seen as a way to escape the capital controls and censorship imposed by the Chinese government, especially after its crackdown on the crypto industry in 2023.
- The possibility of Hong Kong approving the first spot bitcoin ETF in Asia. This could boost the adoption and awareness of bitcoin in the region, as well as attract more institutional and retail investors. Hong Kong is one of the largest financial hubs in the world, with a high concentration of wealth and a strong demand for alternative investments.
- The resolution of the banking crisis in the US, after the collapse of SVB Financial Group, the parent company of Silicon Valley Bank, in December 2023. This event triggered a systemic risk and a liquidity crunch in the banking sector, as well as a loss of confidence and trust in the traditional financial system. This could increase the demand for bitcoin, as it is seen as a decentralized and trustless alternative that does not rely on intermediaries or central authorities.
These macroeconomic trends could create a positive feedback loop for bitcoin, as they increase its attractiveness and value proposition, as well as its adoption and network effects.
Bitcoin is on the rise, and there are many factors that are supporting its bull case. The approval of the first spot bitcoin ETFs in the US was a game changer for the crypto industry, as it opened the door for more investors to access the digital asset class. The shifting flows of capital from gold to bitcoin also indicate that the cryptocurrency is gaining more recognition and acceptance as a store of value and a hedge against inflation. The macroeconomic trends also create a favorable backdrop for bitcoin, as they increase the liquidity and demand for risky assets, as well as the volatility and uncertainty in the financial markets. Bitcoin is also seen as a way to escape the capital controls and censorship imposed by some governments, as well as a decentralized and trustless alternative to the traditional financial system. All these factors could propel bitcoin to new heights in 2024 and beyond.

Leo Frost, the visionary founder and senior content writer at Crypto Quill, brings a wealth of expertise and creativity to the world of cryptocurrency. With a passion for blockchain technology and digital assets, Leo’s insightful articles captivate readers, offering valuable insights into the evolving landscape of crypto. As a seasoned writer and industry pioneer, Leo is committed to delivering engaging content that educates and inspires audiences worldwide.