Bitcoin's 10% Dip Amid Pre-Halving Retrace: A Deeper Look into Current Market Factors
Summary:
Bitcoin's value sees a 10% dip from its record high of $73,835 on March 14. Various factors such as pre-halving retraces, sudden surges in futures market liquidations, and decreases in trade volumes with short-term holders increasing their Bitcoin supply contribute to this decline. Despite the impacts from broader economic activities and potential regulatory measures, the market still holds an optimistic outlook for Bitcoin's eventual recovery.
Bitcoin (BTC) seemed to have lost its upward thrust which reached a record high of $73,835 on March 14, as the price dips 10% from the apex on April 2. This downturn in Bitcoin's value resulted in a 7% nosedive in the early days of April. Let's delve deeper into the underlying elements influencing Bitcoin's current status.
It is thought by some that Bitcoin is entering the typical retraction stage preceding a Bitcoin halving - a phase that traditionally sticks to a set cycle. As in halvings past, Bitcoin seems to be traversing the five stages towards a Bitcoin halving event. The retraction phase, before the halving, happens 18 days prior to the projected date of the Bitcoin halving, which is set for April 20.
An independent crypto dealer and analyst by the name of Rekt Capital proposed, in a post on an X social network, that Bitcoin's ongoing trajectory is part of a retracing process that precedes the halving - this retrenchment over the past halving events in 2016 and 2020 led to a 38% and 20% decrease in Bitcoin value respectively.
By scrutinizing liquidations, it's clear there has been significant activity in the Bitcoin futures market. The spike in liquidations was timed with an increase in volatility. April 2nd saw over $115 million of 'long' positions liquidated - within a 4-hour timeframe on the same day, liquidations surged pass the $21 million mark.
When the 'long' Bitcoin positions are liquidated and buying pressure subsequently decreases, it negatively impacts Bitcoin's value. Bitcoin trading volumes have witnessed a drop of above $30 billion from the year's high of $45 billion in daily transactions, recorded on March 5.
The drop in trade volumes coincides with continued selling pressure on the Bitcoin price. Short-term holders, those investors whose holding strategies only span a short period of time, seems to be the most recent purchasers of Bitcoin. This group of investors now has the largest supply of Bitcoin since July 26, 2021. This could potentially contribute to the ongoing depreciation of Bitcoin's value.
Bitcoin's current value remains susceptible to events in the broader economy, to the incorporation of possible regulatory measures, the anticipated Bitcoin halving and decisions made by the Federal Reserve regarding monetary policy. However, market players maintain a positive outlook for Bitcoin's recovery in the long term, particularly as acceptance of Bitcoin within financial institutions continues to grow. Please note, this article doesn't provide investment advice or suggestions. Every investment carries risk which necessitates for readers to do their own due diligence prior to making decisions.
Published At
4/2/2024 8:21:03 PM
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