Bitcoin price hangs in balance as bulls await hype involving BTC halving

Source Fxstreet
Apr 17, 2024 19:00
  • Bitcoin price has tested $60,364 to $62,412 range, a crucial support zone, one too many times.
  • FOMO and hype about BTC halving remains down amid enhanced market risk linked to geopolitical tensions.
  • Bernstein report says ETF inflows will resume and Bitcoin bull market will continue after BTC halving.

Bitcoin (BTC) price is showing weakness despite the halving event being only three days out. The dismal BTC price action comes amid elevated risk levels in the market, causing traders to flee to the more traditional assets for safety.

Also Read: Bitcoin price outlook amid increased demand and speculation pre-halving

Daily digest market movers: Bulls await hype involving Bitcoin halving

Bitcoin halving is expected on Saturday, April 20, a much-anticipated event that will cut miners’ block rewards to 3.125 BTC. Historically, prices soared about 1,000%, 200% and 600% in the first three post-halving periods. The events have also been associated with significant fluctuations in the BTC price. Although not a direct cause-and-effect relationship, these individual slashes have often preceded substantial bull runs in the Bitcoin market. 

The pre-halving period has often been defined by volatility, although things are different this time amid elevated risk levels because of geopolitical tension and the influence of exchange-traded funds (ETFs). 

There has been a lull in the market with Bitcoin price. According to a report from experts at Bernstein, this bullishness will only restore after halving when exchange-traded fund (ETFs) flows continue. ETF flows have rather died down as of late, adding to the list of data points that traders have to worry about.

Bernstein researchers anticipate around 7% of the network hash rate to shut down after the halving ascribed to less efficient mining operations becoming unprofitable. The reduction will be because of strong price action due to ETFs increasing revenues.  

Meanwhile, while the ETF narrative in the US quells down, the situation in Asia is different after Hong Kong approved both BTC and ETH ETFs. Now, digital asset innovation firm 21Shares says there is speculation that South Korea, Japan and Singapore could follow suit.

As for Hong Kong, reports indicate that ETFs will start trading by April 30 and could bring in up to $25 billion in capital.

Technical analysis: Bitcoin price must defend this level, lest a break below $60K is imminent

Bitcoin price is testing a crucial support, the demand zone between $60,364 and $62,412. The retests to this level are already one too many. The Relative Strength Index (RSI) teases with further downside and continues to slide lower to show momentum is falling.

The position of the momentum oscillator below the 50 mean level shows the average gains are smaller compared to average losses with price steadily dropping. This is reinforced by the lower highs on the RSI showing potential weakness in the price momentum. If this RSI trajectory extends, it could threaten the primary trend in the market to provide a buying opportunity lower.

Both the Moving Average Convergence Divergence (MACD) and Awesome Oscillator (AO) indicators are in negative territory, showing a potential extension of the downward movement in price. Traders might want to consider shorting BTC for the short term, or at best, exercise caution if holding long positions.

A decisive candlestick close below the midline of the demand zone at $61,421 would confirm the continuation of the downtrend. In such a directional bias, Bitcoin price could drop to $59,005, the intraday low of the March 5 trading session before a recovery.

BTC/USDT 1-day chart

Conversely, if the $61,421 level, and effectively the demand zone, holds as support, Bitcoin price could recover. While reclaiming above $65,276 would be ideal, more bulls are likely to come in upon a decisive candlestick close above $70,000 because of skepticism following multiple failed corrections.

For a confirmed uptrend, however, BTC bulls must haul BTC above the $72,198, the midline of the supply zone that ranges from $71,333 to $73,076. Such a move would encourage more bulls to drive BTC past the $73,777 peak as bulls eye the next all-time high above $74,000.   

Bitcoin, altcoins, stablecoins FAQs

Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.

Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.

Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.

Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.

Disclaimer: For information purposes only. Past performance is not indicative of future results.