The approval of the Bitcoin (BTC) spot ETF on January 10 injected fresh momentum into its price and the broader cryptocurrency market, propelling the leading cryptocurrency to achieve a new record peak. Despite these ETFs bolstering the crypto realm in anticipation of the impending bitcoin halving, a recent report from Glassnode advises traders to recalibrate their strategies and approach cautiously.
This caution stems from indications that the typical post-halving price surge may not follow the usual pattern this time.
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Bull Markets Anticipate Bitcoin Halving’s Impact
Many traders anticipate significant gains for Bitcoin’s price after its recent 9% dip from the record high of $73,580, especially with the approaching halving event in April. Bitcoin halving involves a 50% reduction in miner rewards, effectively slowing the rate of new Bitcoin issuance. Consequently, traders typically foresee a price surge after halving, as the reduced supply rate tends to drive up prices, assuming demand remains steady or increases.
After the halving, mining expenses will double, pushing miners to keep certain prices for mining profitability.
Ki Young Ju, CryptoQuant founder and CEO
The History of Halving
Historical data suggests that past halving events, dating back to November 2012, have consistently coincided with significant Bitcoin value increases. The first halving, reducing block rewards to 25 BTC, saw a price surge from $13 to $1,152 the following year. Subsequently, the second halving event witnessed a price escalation from $664 to $17,760 within the subsequent year. Following the third halving, which decreased block rewards to 6.25 BTC, Bitcoin’s price soared from $9,734 to $67,549 the following year.
Many traders anticipate a comparable trend, with the next halving slated for April. While historical patterns don’t guarantee future results, they have reliably forecasted Bitcoin’s price trajectory. This aligns with the popular stock-to-flow (S2F) model advocated by crypto analyst PlanB, which predicts Bitcoin’s value based on its scarcity.
The consolidation on #Bitcoin continues.
I don’t think we’ll see much spectacle coming from Bitcoin; if we do, it will need to break $70.3K.
Above, there is time for new ATHs, but I suspect we’re still seeing the case of peaking pre-halving.
Just like any other cycle. pic.twitter.com/1N1Z0JW4sj
— Michaël van de Poppe (@CryptoMichNL) March 22, 2024
Halving Predictions Under New Dynamics
Recent research by crypto firm Glassnode proposes that Bitcoin’s price trajectory post-halving might deviate from historical patterns, citing new market dynamics. This observation gains significance, notably as Bitcoin achieved an unprecedented all-time high just before the halving event, marking a departure from previous occurrences.
According to the report, Glassnode highlighted that the buying activity generated by ETFs now surpasses the selling pressure from miners striving to offset their operational expenses. Even with daily mining rewards set to halve from 900 BTC to 450 BTC, the scale of ETF acquisitions far outweighs this reduction. Consequently, the report suggests that “the ETFs are preempting the halving’s impact by constricting the available supply through their significant and ongoing buying activity.
Consequently, the report indicates that the typical supply squeeze anticipated from halving events may already be underway due to the substantial bitcoin acquisitions by ETFs. Additionally, it suggests that the sizable holdings of long-term traders and ETFs will play a significant role in directional trading, as any selling pressure from these entities could lead to notable market shifts. This observation further underscores the diminishing influence of miners on the market dynamics.
The report further warned against the optimistic outlook displayed by specific traders, suggesting that “the market’s current structure implies the possibility of encountering another substantial correction.” This cautionary stance follows forecasts from US bank JP Morgan analysts, indicating that Bitcoin’s price remains overbought and that further profit-taking might ensue leading up to the halving event.
Read More: Bitcoin Price Prediction 2024 – 2030
Words from the Analysts
The pseudonymous analyst Rekt Capital suggests that this year’s pre-halving correction for Bitcoin has already commenced. Typically, Bitcoin pre-halving retracements occur within a window of 14 to 28 days before the halving event. Rekt Capital notes similarities between this year’s price decline, the 20% pre-halving correction observed in 2020, and the 40% pullback preceding the 2016 halving.
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