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As we inch closer and closer to the imminent Bitcoin halving, the combined pressures of skyrocketing demand and shrinking supply have created an extraordinary market, turning a historically positive omen into an explosive opportunity for profit.
The approval of the Bitcoin ETF has changed the face of Bitcoin as we know it. Since the SEC made its fateful decision in January, the resulting developments have caused turmoil around the world; Billions have flowed into these new investment opportunities, and regulators in many countries are examining Bitcoin's role in the financial institution. Despite some initial setbacks, the market has comfortably reached all-time highs, and the price has remained in a very impressive range despite the volatility.
However, we are in a very unique position that can impact the market in unpredictable ways. Bitcoin's next halving is scheduled to arrive in April, and this will be the first time in its entire history that the halving coincides with an all-time high for the price. Although there were a great deal of differences between each of the major halvings, the trend was generally noticeable: even if there are huge consistent gains, it could take a year to 18 months before Bitcoin breaks all records by a real percentage. . Rising prices. One year after the halving in June 2016, the price of Bitcoin doubled; But after a few months, the growth was closer to 30 times.
There is a lot of optimism from major players in the industry, such as Standard Chartered Bank's bold prediction that the value of Bitcoin will double to $150,000 before the end of the year. However, their analysis of the situation is mostly based not on halving trends, but on the massive success of the Bitcoin ETF, and this success has also led to a curve. As community discussions quickly indicated, major ETF issuers were pouring billions into Bitcoin, buying at eye-watering prices and amassing some of the world's largest Bitcoin supplies overnight. If they collectively buy more than the global community, how will they react when the flow of new currencies is cut off?
In other words, we are heading into a situation where demand is at an all-time high and there is not enough supply to meet it. Interested in trade He described the upcoming halving as a “momentous event,” considering that the ETF has made “permanent changes to Bitcoin’s underlying infrastructure.” Cryptocurrency stocks have echoed these sentiments while warning of a positive demand shock, with head of research James Butterville claiming that “the launch of multiple Bitcoin ETFs on January 11 led to an average daily demand of 4,500 BTC (trading days only), while mint… An average of 921 new BTC per day.And this is only taking into account pre-halving mining rates, as ETF issuers already rely on used BTC sales to fill their coffers, and this trend seems certain to increase in the near future.
Isn't that a good thing, though? Positive demand shocks are, as a rule, associated with jumps in prices. In addition, although such shocks in commodities like oil can lead to inflation, Bitcoin is not yet a staple of the entire global economy. The same disadvantages are unlikely to apply yet. In other words, the answer is generally yes, but the situation could still cause worrying trends. For example, the night of March 18 witnessed a truly puzzling development: the value of Bitcoin reached highs of around $70,000, and the value of Bitcoin on the BitMEX platform fell below $9,000 in the blink of an eye. The price recovered quickly and was, however, isolated to this exchange only, but it is still an unprecedented development.
BitMEX announced that the reason behind this negative price spike was a series of large sell orders in the middle of the night, and that they were investigating this activity. Several unidentified whales in particular have emerged as potential candidates for these sales. We still have no idea who exactly they are or who has been buying Bitcoins at this incredible rate, but it's just an example of how a major sell-off can torpedo market confidence. However, this one episode is only a particularly acute example of the general trend; “Continuous” spot selling as the price of Bitcoin takes a bloody hit. The market bottomed out at $62,000 on Tuesday afternoon, while it was near $72,000 the previous Friday morning.
However, traders remained quite optimistic that these price declines are nothing more than a “bear trap” associated with the pre-halving environment, and that they are not the only ones. Prominent executives, including Binance CEO Richard Teng and Crypto.com CEO Chris Marszalek, have supported the view that this kind of price declines are a completely normal and temporary component of the scheduled halving. There is a clear trend of significant price declines, from 20% to 40%, in the weeks immediately preceding the last halving. However, the price rebounded quickly and completely, reaching new all-time highs.
In other words, some of the recent and surprising price drops can be entirely explained using data from Bitcoin's history. So, the relevant questions for us is whether the future of Bitcoin will follow the same line. The fact of the matter is that all available evidence points to optimistic forecasts in the long term. A positive demand shock from ETF takeovers and halvings may make it more difficult for the average consumer to purchase Bitcoin, but how will this difficulty manifest itself? Higher prices. Furthermore, one of the selling points of the ETF is that a lot of everyday consumers will use it to capture Bitcoin profits, rather than outright custody. This alone will encourage ETF issuers to keep buying pressure high. It is impossible to say how long this market situation will last or what it will mean for Bitcoin as an actual currency, but there is no indication in the current situation that Bitcoin will not continue to grow.
Is it any wonder, then, that society is preparing to welcome Halfling with such enthusiasm? Industry bigwigs are taking great care preparing for “Bitcoin’s Biggest Celebration” with live coverage and meetup events in 7 countries (and counting), and the halving isn’t even expected to happen for another month. It is very likely that 2024 will be remembered as the year Bitcoin truly became integrated into the global financial infrastructure, if January's stunning regulatory victories turn into unprecedented growth by December. Really, the big main concern is whether or not Bitcoin will see a decline in usage as a currency when its value in fiat currency is so valuable. However, the signs now seem quite clear: Bitcoin is set to forge a path into the future.
