Assessing the Likelihood of Bitcoin Decline Post-Halving
While most analysts anticipate a shortage and subsequent price surge after a Bitcoin halving, it’s essential to consider potential scenarios where the price could decrease. Here are a few arguments supporting this perspective:
Statistics
Historically, Bitcoin has corrected by 38% in one out of three cases following the 2016 halving. These corrections often coincide with a “buy the rumors, sell the facts” approach, leading to significant sell-offs despite no major negative factors.
For instance, Bitcoin’s price surged by 75% in 2016, only to fall by 38% to $470 within two months after the halving.
Similarly, this year, the price has risen by 74%, prompting many investors to secure profits. For example, the approval of spot ETFs also triggered a 21% correction to $38.5k.
Compensation Halving
This halving differs from previous ones due to the rapid attainment of historical highs and the influx of new buyers through ETFs, accumulating Bitcoin worth $11.3 billion. However, if these funds start selling aggressively, they could offset much of the halving’s positive impact in the short to medium term.
The market is already under pressure as whales, miners and long-term holders cash out profits, while spot ETFs witness four consecutive days of net outflows. These conditions favor continued correction.
Miner Influence
Intense competition among public mining companies has reached unprecedented levels. Yields from terahash capacity are lagging behind the price, indicating a challenging environment.
If the correction prolongs, the majority of miners may increase sales due to reduced halving revenues. CryptoQuant estimates their combined reserves at 1.8 million BTC or $119 billion, with even a fraction of this hitting the market having a significant negative impact.
Conclusion
While halving typically has a positive long-term effect by reducing new supply, the immediate market reaction may be negative. If the aforementioned risks materialize, the price could regress to $45k.
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