Understanding the Dip: Bitcoin's Price Post-Halving

[TL; DR]

The introduction of spot Bitcoin ETFs in the United States has changed the post bitcoin halving price dnamics.

When the bitcoin halving in 2024 occurred, BTC was alread in an overbought market condition, which resulted in the recent price slide.

The Runes and Ordinal in_script_ions ma lead to bitcoin growth in the near future.

Introduction

The activation of the April 2024 halving on the 20th of the month created much hpe in the crpto sector, with a high anticipation that we might have a BTC bull run soon after that historic event. Weeks later, the crpto market is not sure of the exact direction the BTC price will take in the near to long-term periods.

This article will anale possible short-term and long-term Bitcoin price movements. We will also explore the factors influencing the current BTC price trend and focus on other catalsts that ma determine the future bitcoin price.

Bitcoin's Price Dnamics Post-Halving

Based on the current market reactions to the bitcoin price dnamics in the post-halving period it is clear that things have not gone in the wa the wider crpto communit has expected. Basicall, what man crpto participants have failed to realie is that there are three different possibilities in terms of price movements following an bitcoin halving. Lets briefl discuss this before analing them in the context of our current Bitcoin market scenario.

Bullish Momentum: Man crpto experts believe that a bullish momentum should follow a halving since the BTC suppl decreases immediatel after the event. Particularl, after the 2024 halving event the analsts thought that a sharp fall in the suppl of BTC and an increase in institutional investment in the number one crptocurrenc would lead to a strong BTC rall.

The bitcoin price movements during previous post halving periods supports this notion. For example, after the first halving event that occurred in 2021 the price of bitcoin increased b over 1,000%. Similarl, after the second halving it rallied b over 200% while it increased b at least 600% after the third one. Based on such price movements, some bitcoin maximalists were expecting the BTC price to surge immediatel after the 20 April halving event.

Bearish Correction: Some sceptics argue that there is no defined price trajector for bitcoin after the halving event. In fact, the strongl believe that bitcoin ma undergo a temporar price correction or a period of consolidation after the halving. However, that depends on the prevailing crpto market sentiment.

Sidewas Movement: The third possibilit is that bitcoin ma experience a sidewas price movement after the halving event. This occurs when the potential effects of the halving is mitigated b other factors including macroeconomic ones. For example, geopolitical tensions in the Middle East or a hike in interest rates in leading global economies like the United States or United Kingdom could contribute to such a scenario.

However, the post halving period in the past showed various phases which bitcoin ma undergo. Immediatel after the halving events there were expansion phases which were characteried b price surges caused b positive news and market Optimism.

After the peak of a bull run a contraction phase characteried b high selling pressure and declining BTC prices would follow. Finall, bitcoin would enter a consolidation phase represented b market equilibrium and price stabiliation. The following graph shows bitcoin price movements during some past bitcoins post halving periods. Bitcoin Halving Ccles: Cointelegraph

The image above shows the expansion phase, contraction phase and correction phase in the past post halving periods.

The Current Bitcoin Price Dnamics within the Post-Halving Period

The current bitcoin price movement is influenced b two things, the halving event and the launch of spot bitcoin ETFs in the United States. Before the halving event the main driver of the bitcoin price surge was capital inflow from spot BTC ETFs in the United States.Specificall, after the approval of the BTC ETFs in Januar there was much capital inflow into the bitcoin market. However, towards the halving event the funds inflow stalled leading to a bitcoin ranging market. Subsequentl, in Ma the bitcoin price slumped.

The current bitcoin price drop started a few weeks before the halving event. As a fact, the BTC price fell to around $63,000 before gaining marginall to reach $65,011 on 20 April. However, after that date bitcoin experienced further gains to reach a high of $67,020 on 24 April. Once again, it lost much momentum as it slid down to $56,803 on 1 Ma. Since then it has been ranging mostl between $57,000 and $64,000 as the next image denotes. BTC Price between 20 April and 10 Ma CoinGecko

As observed on The Graph, the purple line indicates the BTC price on the halving date. Currentl, its price is far below that level showing a depressed bitcoin market. Nevertheless, the current post halving price dnamics are not surprising considering that BTC had a strong rall for about three months before the halving event. During that perio, it attained an all-time high of $73,737.94 on 14 March. Presentl, the bitcoin price is 14.6% lower than that ATH.

Based on the current crptocurrenc market analsis the main cause of the bitcoin price upswing during that period were the bitcoin ETF inflows. Nevertheless, the post bitcoin halving price fall has surprised man crpto investors who had anticipated a crpto bull run to occur, starting in April. There are several reasons wh the BTC price plummeted during the post bitcoin halving 2024 period.

As pointed above, bitcoin had a strong bull run between mid-Januar and the first three weeks of April. It is the first time for bitcoin to experience such a strong run a few months before the halving event. Mati Greenspan, Quantum Economics founder, also noticed that such a bitcoin price move before a halving event was a unique occurrence.

In an interview with Cointelegraph, Greenspan said, Whats unique about this latest Bitcoin halving is the incredible bull run and price action leading up to it. Even considering this recent pullback, Bitcoin has still been up 35% since the start of the ear.

According to Greenspan the economic impact on Bitcoin price is clear and strong. He/she added, Considering the expectation of et another Fed pivot and whats happening in the stock market, Bitcoins current price action is hardl a surprise. Similar macroeconomic factors have also affected the performance of the stock market which is also underperforming.

JPMorgan Analsts' Predictions for a Post-Halving Price Drop

Some crpto market analsts bitcoin price forecasts pointed to the present situation. For example, JPMorgan analsts bitcoin price prediction indicated a BTC downswing in the post halving 2024 period. As per TheBlock, in March the JPMorgan analsts predicted that the bitcoin price would fall below $60,000 soon after the halving event. The even suggested that it might reach $52,000. Alread, on 1 Ma the bitcoin price reached a post halving low of $56,803, a few thousand dollars sh of $52,000.

Nikolaos Panigirtoglou, a leading JPMorgan investment analst said, "We do not expect bitcoin price increases post halving as it has been alread priced in. In fact we see downside for the bitcoin price post halving for several reasons. The JPMorgan analsts bitcoin trading insight was based on the fact that during a few months before the halving event BTC was in overbought market conditions which indicated an eminent downswing.

According to the same source, Pedro Lapenta, Hashdex research head, shared similar sentiments. He said, With bitcoin seeing seven straight months of gains, its tpical for the period following a halving to involve modest increases or corrections, as were observing now.

A related explanation is that the current correction is a result of profit taking b man crpto investors who acquired bitcoin during 2022 and 2023. Man spot ETF investors ma have been taking profit as well after the strong share appreciations since Januar. For example, within the last few weeks some ETF investors have been exiting Grascale Bitcoin Trust ETF (GBTC).

Role of ETF Inflows in Bitcoin's Recent Rall

We have talked about the impact of bitcoin ETF inflows towards the recent BTC rall. True, the spot bitcoin ETFs contributed to the recent bitcoin uptick. Man investors interpreted the United States approval of bitcoin ETFs as an acceptance of BTC as a legitimate investment asset. As a result, soon after their launch man retail and institutional investors invested in the ETFs. Some even acquired bitcoin on exchanges resulting in its price surge.

As the demand for bitcoin ETFs rose significantl within the first three months of their launch the crpto ETF issuers such as BlackRock, Fidelit, and ARK purchased BTC at an unprecedented level leading to its price spike. For instance b 15 Februar the bitcoin sponsors had acquired over 251,888 BTC. Therefore, the purchased more bitcoin than what was being produced resulting in a shortage which pushed its value up.

Beond the Halving: Other Catalsts for Bitcoin's Growth

Despite the bitcoin investment trends explained above, there are other factors that ma contribute to bitcoins growth during the post halving period. The development that recentl occurred on the bitcoin blockchain including the launch of Runes and ordinals in_script_ions have ignited renewed BTCs utilit.

Runes, which are fungible tokens, were introduced on the halving date while Ordinals were launched in Januar 2023. The Runes protocol enables developers to create fungible tokens like meme coins on the bitcoin blockchain. These two on-chain products have led to a surge in the demand for the bitcoin network.

Conclusion

Profit taking on the part of bitcoin and ETF investors has contributed to the decline in the BTC price. Also, the fact that the halving event 2024 occurred at a time when bitcoin was in an overbought market condition explains its recent price dip. However, a resurgence of ETF inflows and a rise in the demand for Runes and Ordinals ma result in renewed interest in bitcoin which ma lead to future rallies.

FAQs about Bitcoin

Wh is bitcoin price falling?

One reason the bitcoin price is falling is profit taking on the part of investors who acquired the crptocurrenc during 2022 and 2023. Some spot bitcoin ETF investors ma also be selling their shares thereb reducing net capital inflows in the BTC ETF market.

Will bitcoin go up again?

The bitcoin price ma go up again when both retail and institutional investors demand more of it than in the past. The approval of spot BTC ETFs in other countries ma also push its price up.

Does bitcoin price go down after halving?

After halving the bitcoin price ma rise, fall or move sidewas depending on the prevailing market conditions. However, after the April 2024 bitcoin halving the price of bitcoin rose for a few das before falling. Currentl, bitcoin is moving sidewas showing that it ma be in a market accumulation phase.

Does bitcoin halving reduce suppl?

Yes, bitcoin halving reduces BTC suppl since it leads to the reduction of mining rewards. As a fact, the 2024 halving reduced the mining reward from 6.25 BTC to 3.125 BTC.