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Next month's reward halving could add to the ETF tailwinds for bitcoin, the report said.
Spot ETFs could become a more meaningful contributor to bitcoin’s price action.
BTC miners show signs of decoupling from the cryptocurrency's price as the halving event raises questions about profitability, Canaccord wrote.
The more than 60% rally in bitcoin (BTC) in the first quarter was driven mainly by the approval of spot exchange-traded funds (ETFs), the impending reward halving and an appetite for increased risk in financial markets, broker Canaccord Genuity said in a research report on Thursday.
“While the macro outlook and timing of potential rate cuts remain uncertain, the upcoming halving event could add to the ETF tailwinds for bitcoin,” analysts led by Michael Graham wrote, adding that “for the rest of the ecosystem, activity levels continue to rebound from 2023 lows.” The quadrennial halving is when miner rewards are slashed by 50%, thereby reducing the supply of bitcoin. The next halving is expected in April. Canaccord says it is encouraged by the Securities and Exchange Commission’s (SEC) approval of 11 U.S. spot bitcoin ETFs in the quarter. “While bitcoin’s increase in value during Q1 was far greater than ETF inflows, this tailwind should persist as retail investors look to add crypto exposure to IRAs and other tax-advantaged accounts, and we expect spot ETFs could become a more meaningful part of bitcoin’s price action going forward,” the authors wrote. IRAs are a way of saving for retirement in the U.S.
Publicly traded miners underperformed bitcoin in the first quarter, showing signs of decoupling from the cryptocurrency's price, the report noted. Canaccord said next month's halving has introduced uncertainty about the profitability of some miners, and spot ETFs have given equity investors an alternative means of gaining exposure to the world’s largest cryptocurrency. “If history were to repeat itself, an even more bullish period for bitcoin and crypto could potentially be on the horizon in the months following this halving event,” the report added.
Read more: Bitcoin Could Slide to $42K After Halving Hype Subsides, JPMorgan Says