(Kitco News) – Bitcoin (BTC) is beginning to show signs of stabilization on Wednesday as attempts by bears to smash its price lower are having less effect than in recent days, despite BTC briefly breaking below support at $61,000.
Data provided by TradingView shows that bears managed to drop King Crypto to a low of $60,750 in the early hours, at which point bulls took control of the price action and steadily pushed it higher throughout morning trading. At the time of writing, BTC trades at $64,200, an increase of 2.15% on the 24-hour chart.
BTC/USD Chart by TradingView
Multiple analysts have attributed the uptick in volatility and the pullback in Bitcoin price to the approaching halving, which is causing uncertainty about how miners will respond when their revenue is cut in half.
“It's normal for volatility in the 1 month [on] either side of the Bitcoin Halving,” tweeted Charles Edwards, founder of Capriole Fund. “At this point, everyone who wanted to buy into the Halving mostly has.”
“Following the Halving we have inefficient miner shutdown and other transitory effects. Somewhat like the 1-month post-ETF launch was a non-event for Bitcoin,” he added. “However, the realities of a much lower supply growth rate + unlocked pent-up tradfi demand will then kick in and launch 12 months of historically the best risk-reward period for Bitcoin.”
Edwards also warned that history shows Bitcoin could still fall lower before eventually resuming its uptrend.
A normal Bitcoin bullrun pullback is 30%. Back in December, we were already in the longest winning streak in Bitcoin's history. A 20% pullback here takes us to $59K. A 30% pullback would be $51K. These are all levels we should be comfortable expecting as possibilities.
— Charles Edwards (@caprioleio) March 19, 2024
While the halving is undoubtedly affecting the market in some form – if for no other reason than the fact that crypto proponents continue to focus on the 4-year halving narrative – CryptoQuant CEO Ki Young Ju said the primary source of volatility in the Bitcoin market is still the spot BTC ETFs.
#Bitcoin market is fueled by spot ETFs, not by the halving event.
After the halving, mining expenses will double, pushing miners to keep certain prices for mining profitability.
Direct cost per coin will rise to approx $37K, but at $63K, it's no longer a problem for them.— Ki Young Ju (@ki_young_ju) March 19, 2024
Bringing some balance to the conversation is Mikkel Morch, founder of the digital asset investment fund ARK36, who said there are a variety of factors that have led to the current situation.
“As investors shine the spotlight on the recent sell-off in Bitcoin, following its latest all-time high, many are undoubtedly pondering their next move,” Morch said in a note to Kitco Crypto. “Amidst this uncertainty, we need to acknowledge the volatility surrounding the upcoming Bitcoin halving event.”
“The shutdown of inefficient miners post-halving could lead to a significant supply tightening, potentially laying the groundwork for a bullish trajectory both shorter and longer-term,” he said. “The bullish outlook is thus still in place.”
But aside “from many mainstream narratives, it is however important to emphasize the role of market dynamics beyond the halving event itself,” Morch added. “Rather than solely attributing Bitcoin's current fluctuations to the impending halving, we suggest a nuanced view, considering factors like spot Bitcoin ETF flows, evolving miner profitability post-halving, and general market psychology with high ‘greed levels’ on pretty much all fronts.”
“With more Bitcoin retracements potentially looming and historical patterns indicating potential turbulence, we advise investors to tread carefully while exploring opportunities amid the uncharted territory of the 2024 halving,” he concluded.
Market analyst Rekt Capital showed that the tide may be turning on this pre-halving pullback as it has a similar magnitude as the pre-halving pullback in 2020.
#BTC
This current -18% Bitcoin Pre-Halving retrace is very close to equaling the -19% Pre-Halving retrace in 2020$BTC #Crypto #Bitcoin pic.twitter.com/bRCPXnBGFL— Rekt Capital (@rektcapital) March 20, 2024
