(Kitco News) – Pre-halving weakness continued to influence the price action in the crypto market on Wednesday as Bitcoin (BTC) briefly fell below $60,000 while altcoins fell and then recovered amid uncertainty from investors.
Stocks recorded another day of losses after initially opening higher as traders evaluate the risk that conflict in the Middle East poses to markets. Uncertainty on the timing of interest rate cuts has also resulted in hesitation by investors to increase their exposure to risk assets, leading to additional weakness.
The confluence of headwinds resulted in declining prices for gold, stocks, the DXY, the U.S. 10-yr Treasury note, and cryptos on Wednesday, suggesting confusion among investors who are trying to navigate the most challenging investing landscape in over a decade.
At the closing bell, the S&P, Dow, and Nasdaq finished in the red, down 0.58%, 0.12%, and 1.15%, respectively.
Data provided by TradingView shows that after hitting a high near $65,540 in the early morning, Bitcoin stair-stepped its way lower throughout the trading day, bouncing off a low of $59,640 in the afternoon to trade at $61,150 at the time of writing, a decrease of 2.5% on the 24-hour chart.
BTC/USD Chart by TradingView
“As the Bitcoin halving draws near – expected by Saturday, April 20th – the amount of BTC leaving exchanges has hit its highest point since January 2023 last week,” said analysts at Bitfinex. “Simultaneously, the one-year-plus inactive supply, that is the total number of BTC that has not been moved in over 365 days has plummeted, this implies that the market is at a major inflection point.”
“The current actions of Bitcoin holders mirror those seen in December 2020, just before a significant rise in the Bitcoin market,” they added. “This pattern suggests we may be entering a similar growth phase.”
“Over the past month, we have seen long-term holders (LTHs) – investors who have held their BTC for more than 155 days – actively selling off their coins at a rate of about 16,800 BTC daily,” the analysts said. “Drawing from previous cycles, this trend typically lasts about seven months and is often a precursor to a market downturn, suggesting we may be six months out from the BTC peak for this cycle.”
That said, the analysts noted that this cycle has been “more compressed” than previous cycles and “prices have been moving up faster,” as evidenced by Bitcoin recording a new all-time high weeks before the halving for the first time in its history.
“In general, [long-term holder] supply decreases gradually before BTC reaches its peak value later in the cycle,” they said. “If the price holds up relatively well even when whales and long-term holders are distributing, that means that the market is absorbing their selling effectively.”
“If this pattern holds true, then the current drop should be taken as a positive sign as the declines we have been seeing are not as pronounced in comparison to previous pre-halving sell-offs,” they concluded. “With fewer coins now being held by LTHs, it's clear that more recent trades involve newer investors. On a historical basis, a cycle peak in prices usually occurs several months after an increase in new STHs.”
Supply shock to push Bitcoin above $100,000
While Bitcoin struggles in the face of pre-halving volatility and rising geopolitical concerns, its long-term outlook remains promising, according to macro analyst Lyn Alden, who sees King Crypto surpassing $100,000 over the next year and a half.
Alden made the prediction during an interview with Blockworks Macro, saying that long-term holders are not yet willing to sell their BTC at the current prices, which is leading to a dwindling supply of Bitcoin on exchanges while global liquidity is rising.
“For Bitcoin, most indicators that I track point to being fairly midcycle in terms of the bull run,” she said. “I still think the next 18 months look favorable for the asset. Again, it tracks global liquidity pretty well. The on-chain indicators can show us, for example, how much long-term holders are selling into current strength.”
“Even though Bitcoin supply is constrained, if the price goes up 3x or 5x in a fairly short period of time, you generally [get] some of those older coins start to come to market, start meeting that new demand,” Alden added. “We’ve seen some of that but so far we’ve seen less of that in this cycle than in prior cycles.”
“My expectation is there’s room to run both from the liquidity side being fairly constructive. That should help demand,” she said. “And I still think there has to be a higher price to unlock some of these older coins to meet that demand.”
“I would be surprised not to see six-figure Bitcoin over the next 18 months,” Alden concluded.
Altcoins mixed
After falling under pressure earlier in the day, the altcoin market bounced back in the afternoon, resulting in a mixed performance, with a slight majority of tokens in the top 200 recording a loss.
Daily cryptocurrency market performance. Source: Coin360
Injective (INJ) led the gainers with an increase of 14.8% to trade at $27.93, while Book of Meme (BOME) gained 14.2%, and Sui (SUI) climbed 12.3%. Mantra (OM) was the biggest loser, declining by 11.4%, followed by a loss of 10.1% for Saga (SAGA), and a decline of 9.4% for Echelon Prime (PRIME).
The overall cryptocurrency market cap now stands at $2.24 trillion, and Bitcoin’s dominance rate is 53.6%.
