March 2024: Bitcoin Reaches New High Ahead of the Halving
Research Team
Last Updated: 4/1/2024 | 11 min. read
Bitcoin fully recovered from its 2021-22 drawdown, reaching a new all-time high price in March 2024. In Grayscale Research’s view, the eagerness of central banks to cut interest rates may be a component of what is driving demand for alternative stores of value like physical gold and Bitcoin.
Ethereum successfully implemented a major network upgrade, but the Ether token underperformed Bitcoin during the month, possibly on lower perceived odds of spot ETF approval in the US market.
The Bitcoin halving (scheduled for April 19), where issuance will fall by half, will contrast the network’s predictable monetary policy with the uncertain outlook for fiat currency.
Exhibit 1: Faster Bitcoin recovery compared to prior two cycles
Many traditional assets also delivered positive returns in March 2024. On a risk-adjusted basis (i.e. accounting for each asset’s volatility), Bitcoin’s performance was at the higher end of the range and Ether’s returns were closer to the middle of the pack (Exhibit 2). The best performing segments of traditional asset markets last month included physical gold, non-US developed market stocks, and energy-related equities. Certain equity market segments tied to emergent technologies, like biotechnology, underperformed the broader market.
Exhibit 2: Bitcoin among best performing assets in March 2024
Exhibit 6: Consumer & Culture Crypto Sector up more than 30%
However, we believe demand for Bitcoin ultimately derives in part from investor interest in its properties as a “store of value” asset. Bitcoin is an alternative money system with a unique and highly predictable monetary policy. Whereas the supply of US Dollars is determined by the personnel at the US Treasury and Federal Reserve, the supply of Bitcoin is determined by preexisting code: daily issuance falls by half every four years until a cap of 21 million coins.
[2] Monthly Bloomberg surveys of economists/forecasters; data from Bloomberg Terminal as of March 31, 2024.
[3] Source: “Bank of England Inches Closer to Rate Cuts as Hawks Retreat”, Bloomberg, March 21, 2024; “SNB First to Loosen as Swiss Franc Strength Tops Concerns”, Bloomberg, March 21, 2024.
[4] Source: Bloomberg; based on New York closing prices from March 13 to March 19.
[5] Source: Bloomberg, as of March 28, 2024.
[6] Source: Grayscale Research calculations based on Bloomberg data, as of March 31, 2024.
[8] The FTSE Grayscale Crypto Sectors family of indexes underwent its regular quarterly rebalancing on Sunday, March 17.
[10] Source: The Block.
[11] Source: Bloomberg, data as of March 28, 2024.
