Bitcoin: ETF spot approval confirms store of value thesis

Bitcoin renewed its record price in 2024, propelled by the halving event which cut the issuance of the leading cryptocurrency in half over the past weekend, alongside the approval of the bitcoin spot ETF by the Securities Exchange Commission (SEC, the U.S. CVM). While the price of bitcoin is currently tied to the global liquidity situation determined by the U.S. interest rate, the approval of the spot ETF marks a significant milestone in recognizing bitcoin as a store of value.

Thales Freitas, CEO of the Mexican exchange Bitso, shared this perspective during a conversation with Investing.com Brasil at the Web Summit Rio on Wednesday (17th). He reflected on Bitcoin's historical journey before the halving, noting differences in this year's trajectory. Freitas also offered insights into what to expect from Bitcoin and other cryptocurrencies during the ongoing bull cycle, highlighting a departure from previous patterns.

Here's a snippet of the conversation with market analysis by Bitso's CEO:

Investing.com: The price of bitcoin is trading sideways in the range between $65,000 and $70,000. After the launch of bitcoin spot ETFs and the halving, how do you see the market in the next six months?

Thales Freitas: Whenever there is a halving, historically there is a very large rally beforehand, now there is a significant correction that is closely related to the U.S. interest rates, as they dictate market liquidity.

After the halving, it is common to have a sell-off, this time a bit earlier compared to previous ones, just as it happened with the recent rally. However, I believe that Bitcoin is an extremely scarce asset, because 1 BTC is always 1 BTC.

When looking at the United States, the debt is growing annually by 8%, a very high rate. The IMF itself stated that it is concerned about the trend in the trajectory of U.S. debt. This is a scenario that makes me more optimistic, wanting to have more bitcoins.

Inv.com: Do you believe that Bitcoin has a tendency to be a store of value even with its price currently intertwined with market liquidity conditions?

TF: Bitcoin has always been associated with "digital gold," but there was a sell-off after the outbreak of Covid-19 and it is very much related to interest rates.

But with the trend of having more institutions involved, with the supply of Bitcoin decreasing, volatility will decrease a lot. It is still a volatile asset, and it will be so for the next 10 years.

The trend is for Bitcoin to be a much less volatile asset for future generations, similar to gold, which is a reserve asset when there is inflation. Bitcoin will be seen as protection when investors are buying, whether through an ETF or other means.

Inv.com: Will Bitcoin have a characteristic similar to that of a property located in a highly valued area?

TF: Yes, especially in a valued and densely populated region in a country that respects private property. These regions usually need to demolish a building to construct another.

When the SEC approved the ETF, it was a moment that validated the thesis of Bitcoin as a long-term asset.

Inv.com: After the bitcoin rally, historically comes the altcoin season. Will it happen this time? Could it be different because these blockchains are involved in other projects such as payments and tokenization?

TF: Most of my personal portfolio is in Bitcoin. Sometimes I consider buying an altcoin for an innovative project. With the exception of Solana and the memecoins, which also had an incredible performance, altcoins have been somewhat disappointing in the current rally, however, I see the opportunity.

In past cycles, the order was bitcoin, altcoins, memecoins, and NFTs. This time it was a bit reversed, with bitcoin, memecoins, and some NFTs rising a lot and altcoins being left aside.

There are projects that are well established, but I think some will fall by the wayside because there is not enough space for all of them. And Bitcoin is the reference asset and there are others worth having in the portfolio.

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This article first appeared in Investing.com