Bitcoin's Pre-Halving Retrace, Liquidation Surge, and the Future Outlook
Summary:
Bitcoin's steady rise to a historical peak of $73,835 on March 14 seems to be slowing down, with an 8.3% decline noted as of March 18. Analysts attribute this to a historically recurring pre-halving retrace. Accompanying this is an increase in Bitcoin liquidations and a drop in trading volumes. Further, a significant part of Bitcoin's recently increased holdings are by short-term holders. While Bitcoin's value continues to be influenced by larger macroeconomic events and potential regulations, industry players remain hopeful about the cryptocurrency's long-term recovery.
Bitcoin's positive trajectory, which saw a record climb to $73,835 on March 14, shows signs of slowing down, with an 8.3% drop from the peak as of March 18. This reduction in Bitcoin's value occurs as some market participants argue that the Bitcoin market is becoming overly inflated following the approval of the spot ETF. In scrutinizing this situation, let's delve into the elements impacting today's Bitcoin pricing.
Certain market observers argue that Bitcoin is in the initial stages of the so-called pre-halving retrace, a historically recurring trend. The present downturn ahead of halving aligns with previous patterns and coincides with the pending conclusion of the Federal Open Market Committee (FOMC) set for March 20. Renowned crypto trader and independent commentator, Rekt Capital, implies in a social media post, that today's market trends reflect a pre-halving retrace as exhibited by the 38% and 20% dips that occurred during the 2016 and 2020 halving cycles.
An increase in Bitcoin liquidations is evident in strong swings within Bitcoin's futures market. Long liquidations are in synchrony with soaring volatility. On March 18 within a 24-hour window, liquidations surpassing $40 million were noted with long liquidations peaking at over $15 million within a four-hour stretch that same day. As liquidations climb, the lack of buy-side demand from traders negatively affects Bitcoin's pricing. The volumes of Bitcoin trading have witnessed a fall by more than $25 billion from the annual high on March 5 of $45 billion recorded in daily activities.
Alongside over half of the trading volume dropping from the yearly high, long-term holders are mitigating risk and collecting profits. Recent patrons of Bitcoin seem to primarily consist of short-term holders, whose numbers, representing the largest Bitcoin holdings, haven't been as high since July 26, 2022, potentially driving Bitcoin prices downward.
Simultaneously, as Bitcoin's value continues to be influenced by broader economic events, potential regulation and the Federal Reserve’s monetary approach could also sway Bitcoin's pricing. Market players remain hopeful in terms of a longer-term recovery in Bitcoin's price, particularly given the burgeoning acceptance of Bitcoin within financial establishments. This piece is devoid of any investment advice or recommendations, as every trading and investment decision carries some risk, thus it is crucial for individuals to carry out their own research before making any choices.
Published At
3/18/2024 8:15:52 PM
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