Bitcoin Faces Downward Trend Amid Pre-Halving Contraction and Increased Liquidations
Summary:
Bitcoin's upward trend, which peaked at an all-time high of $73,835 on March 14, is losing steam with a decline of 13% as of April 15. Factors such as the typical pre-halving contraction, accelerated Bitcoin futures market liquidation, reduced exchange trading volumes, and an increase of short-term holders contribute to this downturn. Despite immediate influences like macroeconomic events and regulatory actions, financial institutions remain optimistic about Bitcoin's value in the long term.
Bitcoin's robust upward trend, which saw it peak at an unprecedented $73,835 on March 14, seems to be running out of steam. As of April 15, the cryptocurrency's value has fallen 13% from this record high. Despite Ether (ETH) hovering near its lowest prices against BTC in three years, Bitcoin's value has suffered a weekly decline of over 7%. We'll delve deeper into the circumstances influencing Bitcoin's present value.
Speculation has been raised that Bitcoin is currently in its typical pre-halving contraction. Analysts suggest that Bitcoin is tracing a predictable route based on historical pre-halving patterns. In line with past halving events, BTC's value is seeming to follow the five stages of the Bitcoin halving process, with the pre-halving dip occurring 18 days prior to the projected Bitcoin halving date of April 20.
An anonymous cryptocurrency trader and independent analyst, known as Rekt Capital, suggested in a social media post that the current market activity is a pre-halving decline, a phase that saw Bitcoin's value fall by 20% during the 2020 halving cycle.
The liquidation actions in the Bitcoin futures market show significant movement. The acceleration of long-term position liquidations correlates with intensified fluctuations. Over $43.7 million in long positions were liquidated within the 24-hour period of April 15, with liquidations peaking at over $20.6 million in just four hours that same day.
When long positions are liquidated without adequate compensating buying activity, Bitcoin's price is adversely affected. Bitcoin trading volumes have descended by over $24 billion since their March 5 peak activity of $45 billion this year.
As the reduction in exchange trading volume contributes to downward pressure on Bitcoin's price, it appears individuals who acquired Bitcoin most recently are likely short-term holders. Currently, short-term holders hold the largest BTC reserves since July 26, 2021, which could potentially exacerbate the depreciation of Bitcoin's value.
As of now, Bitcoin's pricing appears to be reflexive of broader macroeconomic events, and it's plausible that impending regulatory actions, the BTC halving, and the Federal Reserve's fiscal policy could affect BTC's pricing. Notwithstanding this short-term outlook, the financial community remains optimistic that Bitcoin's value will rebound, particularly as more and more financial institutions integrate BTC into their operations. The views expressed in this article are those of the author only and do not necessarily mirror those of Cointelegraph, nor should it be seen as investment or legal advice.
Published At
4/15/2024 8:02:40 PM
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