How will the halving affect the market?

Thought of the week

In recent years, the Bitcoin Halving has always been the biggest media event of the year, heralding positive price changes with a delay of a few months. This year, however, a major event (Bitcoin Spot ETFs in the US) preceded the halving, thus reducing the short-term importance of the halving. However, this creates long-term opportunities as less supply could meet increased demand in the future, whereby a combination of these catalysts could take Bitcoin to new heights!

Digital Asset News

A jury has found Terraform Labs and Terra co-founder Do Kwon guilty of defrauding investors in a civil case with the US Securities and Exchange Commission (SEC).In an announcement on 5 April, SEC Director Gurbir Grewal accordingly announced that the jury in the US District Court for the Southern District of New York found Kwon and Terraform liable in the civil case after a brief deliberation. The SEC trial began on 25 March without the presence of Kwon, who remains in Montenegro as the courts there are still deciding whether to grant an extradition request from the US or South Korea. “We are pleased with the jury’s verdict today holding Terraform Labs and Do Kwon liable for massive crypto fraud,” Grewal emphasised. He added: “Terraform Labs and former CEO Kwon deceived investors about the stability of the related crypto security [LUNA] and the so-called algorithmic stablecoin TerraUSD, and they also deceived investors about a payment app that used Terraform’s blockchain to process and settle payments.”

Another case from the negative year 2022 can therefore be resolved quickly and the market can look to the future with a clean slate!

As Bitcoin’s current climb is likely to be driven primarily by the newly approved ETFs, there is still plenty of room for the impact of the halving (in theory and according to analyses that apply previous movements to the upcoming halving).

To be precise, Bitcoin has risen by a whopping 658% since the 2020 halving, as data from TradingView shows, taking into account a current price of around USD 66,000 for this calculation. On average, Bitcoin’s climb after a halving has therefore become 45% smaller with each cycle and currently amounts to around 658%. If this pattern of “diminishing returns” continues, the upcoming halving should result in an increase of only 360% by 2028, which would manoeuvre the price to USD 303,600. However, Bitcoin’s recent uptrend is largely independent of the upcoming halving, but is largely due to the introduction of the new Bitcoin index funds (ETFs), as Hao Yang, head of financial products at Bybit, explained to Cointelegraph. “If we look at the halving and price performance strictly from the perspective of quantitative analysis, there is no evidence of a positive correlation between halving and Bitcoin price. However, the past can be interpreted in different ways and that’s why I hope we climb to $435,000 by 2028.”

The world’s leading asset manager BlackRock updated the prospectus of its Bitcoin exchange-traded fund (ETF) on 5 April, adding five major Wall Street firms as new authorised participants to the crypto investment product. The new members include ABN AMRO Clearing, Citadel Securities, Citigroup Global Markets, Goldman Sachs and UBS Securities. This is according to BlackRock’s document amending its ETF registration with the US Securities and Exchange Commission (SEC).
Among the already approved participants of the Bitcoin ETF are JPMorgan Securities, Jane Street Capital, Macquarie Capital and Virtu Americas. Authorised participants play a critical role in the operational mechanism of the BTC ETF, as they can create and redeem shares of the ETF, which includes exchanging ETF shares into a corresponding basket of securities reflecting the holdings of the index fund, or exchanging them for cash.

According to Bloomberg analyst Eric Balchunas, the new additions indicate that “large firms now want a piece of the pie and/or are okay with being publicly associated with it. This could lead to further waves of Bitcoin adoption.

Digital Asset Market

Market report including trading idea

The majority of digital assets experienced setbacks last week, while the start of the week was characterised by positivity. Bitcoin is once again trading at ~$70,000 around a week before the halving, underlining the bullish fundamental direction of the market.
The daily Bitcoin spot ETF inflows and outflows are normalising, are less weighted by the media and make it clear that new narratives can now enter the market. This will be next week’s halving, an event that only occurs approximately every four years and halves Bitcoin’s block rewards. Digital assets have thus followed a general easing of the markets after major rises. This is seen more frequently in bull cycles and leads to support retracements.
On a weekly basis, the overall market performance is therefore around -2%.
The message for the coming week is: All eyes on the Bitcoin Halving and the media review!

Chart technology

From a technical chart perspective, Bitcoin is now in a narrow trend channel between $74,500 and $65,000, which means that a new all-time high could be within reach at any time thanks to a small trend, but at the same time sell-offs from these levels due to profit-taking are also the order of the day, especially if there are media reasons for this (Bitcoin halving).
Historically, there have been setbacks and consolidations around the halving before the market recorded new upswings – these should be utilised sensibly for one-time investors.
The general trend for 2024 should remain bullish, positive global financial markets could certainly support this effect, but the day of the Halving is not the heralding of a new era, but the long-term effects that go hand in hand with it.

The next price targets in the event of a positive development: ~$72,000, ~$74,500, ~$77,000

The next price targets in the event of a negative development: ~$66,000, ~$64,500 ~$61,000

Trading idea

The focus should be on Bitcoin and high caps in the coming days! After the halving, a temporary rotation of capital could take place in which Bitcoin stagnates or declines slightly while altcoins rise. Here, attention should be paid to the trend and appropriate action taken.

Weekly overview

As usual, we are also providing detailed videos for those who want to delve deeper into the subject.


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