BTC breaks through the $40,000 mark, what is the reason behind it?

The surge in the price of Bitcoin (BTC) has attracted widespread attention in the market. However, some analysts are cautious about this upward trend, believing that the conversion of Grayscale's GBTC trust into a spot ETF could have a negative impact on the price of BTC.

The market seems to have reacted to this potential event. However, we should not overlook the latter part of the market adage "buy the rumor, sell the news." Once the news is confirmed, a sell-off may occur in the market, leading to a significant drop in BTC prices.

Looking ahead to the next few years, the BTC price cycle may repeat itself. It is worth noting that the launch of ETFs could have a positive impact on cryptocurrency prices in the long run. However, the market currently does not have the conditions to initiate a new bull market. Before that, we should not rule out the possibility of experiencing a small bear market phase.

Speculators maximize their profit potential by betting on these major events. GBTC has been in the spotlight since the beginning of this year, with billions of dollars flowing into the secondary over-the-counter market. Therefore, once the ETF begins trading, both new and old investors may rush to close their positions, which could lead to a significant drop in BTC prices.

Some ETF application deadlines are in early January 2024, which means we may hear more related news in December this year. An analyst from a major bank predicts that during the conversion of GBTC to an ETF, there may be "at least $2.7 billion in outflows". This massive investor withdrawal could lead to a price drop and bring BTC back to cycle lows.

Therefore, the launch of the ETF may not immediately drive up the BTC price, but rather could become a "sell the news" event, similar to what we observed with the launch of certain futures products before.

Currently, the discount rate of GBTC is 10% (lower than the spot price of BTC on exchanges). After approximately $2.5 billion in funds flowed into GBTC, the discount rate has significantly narrowed. It is anticipated that once the ETF starts trading, a substantial portion of these funds may flow out.

Another important event in 2024 is the BTC halving, which may be the last halving to have a significant impact, becoming a turning point for BTC price trends. With the launch of multiple spot ETFs, institutional capital inflow could be a key factor driving BTC prices to break through $100,000 in 2024.

Although the financial industry has shown a strong interest in cryptocurrencies, the adoption of cryptocurrencies in real life will be determined by the market, not regulatory agencies. The market will determine the use cases and advantages of cryptocurrencies, and ultimately users will judge their practicality and value.

The financial sector will pay attention to the reliability of BTC as a means of value storage and the potential for substantial applications through the Lightning Network when evaluating BTC. In addition to BTC, the industry also recognizes the importance of other cryptocurrencies.

Looking ahead, the cryptocurrency market is expected to maintain a good development momentum in the coming year, but investors still need to remain vigilant and closely monitor market trends.