Potential Bitcoin Correction Predicted Ahead of Halving Despite 72% Surge
[TL; DR]
Market analysts forecast the Bitcoin price to retrace towards $61,700 before resuming the uptrend.
As of mid-March short term Bitcoin holders were sitting at unrealized profit of about 72%.
The bitcoin price may fluctuate between $80,000 and $120,000 by the end of 2024.
Introduction
The crypto market has to contend with the continuous fluctuations of bitcoin and other cryptocurrencies. Although bitcoin gained by over 72% year-to-date, analysts predict that it may retrace after attaining its new all-time high of $73,737.94 on 14 March. This analysis focuses on the possible bitcoin retracement and its short-term price prediction.
Bitcoin Whales Eye Profits: Short-term Holders 70% Gains hint at Potential Sell-off
Bitcoin has been performing remarkably since the fourth quarter of 2023 when most cryptocurrencies started trending, triggered by the Solana’s strong upward price movement since mid-October. Statistically, bitcoin has recorded a 72% year-to-date price increase.
Although bitcoin was trading at around $42,560 at the beginning of the year it had a new all-time high of $73,737 on 14 March, setting a record of attaining an ATH before the halving event. However, after the rally that led to the new ATH some analysts believe that bitcoin may retrace before the bitcoin halving process occurs.
As of 14 March the Short-Term Holder Realized Price and Profit/Loss Margin indicator showed that most short term bitcoin holders had about 70% unrealized profit. Since the bitcoin market analysis shows that this is the largest level of unrealized profit in the last three years it is a potential bitcoin profit taking level for most short term traders.
In simple terms, by the third week of March some analysts expected bitcoin to have a strong sell-off pressure that might have forced it to retrace towards the $61,000 price level.
It is important to note that the Short-Term Holder Realized Price and Profit/Loss Margin indicator tracks the average price of coins last moved within a period of less than 155 days. The following graph summarizes the situation that existed during mid-March.
Short-Term Holder Profit Margin - CryptoQuant
A recent BTC halving market analysis has shown that most short term holders are reluctant to sell their bitcoin holdings. Based on one of the current cryptocurrency market trends such investors anticipate the BTC price after halving to rise. Therefore, they are willing to wait and uate the BTC halving price impact.
The market behavior of the short-term bitcoin holders is different from that of whales who have started selling their bitcoin. The bitcoin whale profit lured the investors to offload over 80,000 BTC, valued at around $4.96 billion in February. If such a high selling pressure continues bitcoin is likely to experience a retracement.
In fact, at the time of writing bitcoin has retraced since it is trading at $65,680 about 11% lower than its recent ATH. The following bitcoin price chart indicates the coin’s price movement for the past few weeks.
Bitcoin Monthly Price Chart - CoinGecko
As observed on the bitcoin price chart above, bitcoin has been retracing since 14 March when it reached $73,737.94.
Read also: Crypto Fever: Bitcoin Approaching $73000 Milestone
Bitcoin Price Prediction: MVRV Indicator Suggests Potential Dip to $61,700
There is no doubt that if the bears maintain the bitcoin selling pressure its price may fall further. The MVRV Pricing Bands indicator shows pre-halving bitcoin trends associated with a falling price. In fact, the bitcoin MVRV indicator shows that its price correction may lead to the 2.4 MVRV level which is close to the $61,700 price mark.
For context, the MVRV Pricing Bands is a graph that plots the MVRV ratio over a certain period and shows different market sentiments. The indicator compares the prevailing prices to historical realization prices, thereby generating trend reversal and continuation signals.
Apart from the current cryptocurrency halving effects the market still shows bullish signals due to the influence of capital inflows into the bitcoin market as a result of spot BTC ETFs recently launched in the United States. For context, the bitcoin ETF operators have acquired 433,843.58 BTC within a two- month period.
Such an inflow into bitcoin may counteract the effects of any possible sell-off and alter the bitcoin market cycles. The sustained capital inflow into spot bitcoin ETFs may force bitcoin to make a breakout which can propel it to test the 3.2 MVRV, currently at around $85,000.
Bitcoin Halving Explained
During the discussion we have touched on the existing pre-halving BTC price predictions. However, before we switch over to the post-halving bitcoin predictions let’s briefly explore what BTC halving is about
In simple terms, bitcoin halving refers to the automatic reduction in the mining rewards at a rate of 50% after adding 21,000 blocks to the blockchain. Based on the past trends the bitcoin halving process occurs after around every 4 years. Currently, we anticipate the next BTC halving event to take place between 19 and 21 April, with 20 being the most expected date.
The aim of the bitcoin mining event is to limit the BTC supply to 21 million. This ensures that bitcoin remains scarce during its entire lifetime. The following graph shows bitcoin’s past halving events and the expected one.
Bitcoin Post Halving Performance – TradingView
The graph above shows bitcoin post-halving performance since 2012. Due to the bitcoin halving correlation after the previous halvening events the BTC price increased significantly within two-year periods.
Post Halving Bitcoin Predictions
Now that we have conducted the bitcoin market analysis for the pre-halving period let’s focus on what is likely to happen after the 2024 halving event.
A recent report by Ark Invest indicates that the price of bitcoin may reach $120,000 in the post halving period if 1% of investable capital is allocated to bitcoin. Nonetheless, the company anticipates a 19.4% inflow of global investable funds into Bitcoin. Interestingly, the investment management firm anticipates the BTC price to reach $1 million by 2030.
Similarly, Bernstein Research, a well-known global asset management firm, predicts bitcoin to reach $80,000 and $150,000 by the end of 2024 and 2025 respectively. The firm believes that an increase in institutional adoption of bitcoin is key to its sustainable price increases in the next two years.
Finally, Bloomberg, a global financial services company, forecasts the price of bitcoin to reach $500,000 in 2024. Although that looks overly optimistic it indicates the faith that many institutions and individuals have in the coin and the prospect of a huge rally after the 2024 halving. Noteworthy, these price predictions may lure investors to defer bitcoin profit taking until after the on-coming halving event.
Conclusion
In spite of the recent bitcoin surge that saw its price reaching a new all-time high, analysts predict that the price of bitcoin might fall to $61,700 before continuing with its uptrend. The reason for this is that most short-term BTC holders have an unrealized profit of around 70% which can trigger a strong selling pressure ahead of the April bitcoin halving. In the meantime, several analysts predict the price of bitcoin to fluctuate between $120,000 and $150, 000 by 2025.
FAQs about Bitcoin Halving
What is the correlation between bitcoin halving and price?
Usually, the price of bitcoin increased significantly after a halving event. In most cases, the price also increased a few months before the halving process.
Does bitcoin go up or down after halving?
Based on the past experience the price of bitcoin goes up after the halving event. Bitcoin often attains a new all-time high within 2 years after the halving event.
Will bitcoin halving affect other cryptocurrencies?
In most cases the bitcoin halving affects other cryptocurrencies as it may trigger the entire market bull run. If that happens the price of most cryptocurrencies increases constantly during that period. Also, since bitcoin has a high correlation with several cryptocurrencies like ETH they benefit from the bitcoin halving.
What happens when bitcoin is halving?
Bitcoin halving reduces the mining rewards by half. In the oncoming halving the mining reward will decrease from 6.25 BTC to 3.125 BTC.
What happens before and after halving?
Several months before the bitcoin halving event its price may rise significantly. Likewise, the price may continue to rise for several months after the halving.
