As next Wednesday's deadline for the approval of spot Bitcoin ETFs approaches, industry insiders are optimistic about the introduction of these instruments, which they believe will pave the way for tens of billions of dollars to flow into Bitcoin over the next few years.

Additionally, market participants are filled with optimism about the upcoming Bitcoin halving, an event in April that will reduce the inflation of Bitcoin block subsidies by 50%, and which historically has typically resulted in lower miner sales, thus Spurring Bitcoin prices soaring.

While just two clear Bitcoin catalysts are enough to set the stage for a rise in Bitcoin price, next year's expected interest rate cuts have traders eagerly anticipating a more favorable macro environment that will allow Bitcoin to break out to new levels. Historical highs.

Nonetheless, the recent bullish rhetoric on Bitcoin has not been stingy. However, before not hesitating to follow Bitcoin’s lead to enjoy the massive gains that may come in 2024, there are some important considerations to keep in mind.

Requirements must be fulfilled

Americans may be new to spot crypto ETFs, but these vehicles already exist in Canada and Europe, and their adoption has varied.

Canada’s Purpose Spot Bitcoin ETF has increased its Bitcoins under management by 50% to 35,000 since the end of September, a respectable increase. Meanwhile, European publisher Jacobi has only managed to amass a meager $1.7 million in assets since launching in November.

Global investors face the same investment story as Americans, and their lack of demand for spot Bitcoin products may mean that U.S. inflows may be less than ideal.

For the approval of a Bitcoin ETF to have an immediate positive impact, issuers must meet new demand from outside investors seeking to gain exposure to Bitcoin; however, it is currently unclear whether such demand exists.

Making it easier to invest in Bitcoin will be a bullish catalyst for the asset in the long term. However, bulls still face the risk of a trading error if the ETF is approved and the resulting immediate inflows disappoint.

History just rhymes

Just because previous Bitcoin halving events have been bullish does not mean that future halving events will be bullish as well.

Just as the small reduction in Ethereum issuance after the merger failed to drive Ethereum price in the following months (the ETH/BTC ratio has fallen by more than 30% since then), the reduction in issuance from this Bitcoin halving Volume is also not guaranteed to have a positive impact on Bitcoin price.

While alleviating selling pressure by reducing block issuance will undoubtedly have some degree of bullish impact on Bitcoin prices, the impact of this halving will be significantly lessened compared to previous halvings; if we expect Bitcoin Don’t be surprised if the post-halving price increase pattern doesn’t materialize.

Interest rate cuts are not automatically beneficial

Many people confuse lower interest rates with easing economic conditions, but they are only one input in the macro story.

All else being equal, lowering interest rates does lower the required rate of return, making risky investments such as cryptocurrencies appear more attractive. However, it is key to remember that rate cuts have historically been a monetary response to economic deterioration.

Regardless of asset class, the biggest risk for any investor is the market, and it's unclear whether lower interest rates will be enough to combat an economy showing signs of recession.

Cryptocurrencies don’t exist during prolonged economic contractions, and peak interest rates suggest the worst of the recession is yet to come.