Bitcoin celebrates its 4th halving this week: get ready for different trends this time!
Bitcoin celebrates its 4th halving this week: this time, get ready to embrace different trends! First appeared on Coinpedia Fintech News
After 2020, Bitcoin is all set to face its fourth halving, where the reward will be halved from 12.5 BTC to 6.25 BTC. Broader market sentiment is optimistic, but given the impact of previous periods, they also need to be aware of notable changes in market dynamics during the current halving. Therefore, the BTC price may not necessarily repeat previous patterns as new patterns may be created.
It is true that the BTC price has faced a notable decline right before each halving, which has made traders and analysts confident of a rebound that could follow. However, market dynamics have evolved slightly since the previous Bitcoin halving, suggesting that BTC price action is gearing up for major price action while its direction remains unclear.
Here are a few factors that have slightly changed the 'half-life perspective':
Bitcoin supply is limited to 21 million, after which new issuance will cease completely. Of these, 7.8 million BTC was lost, and 13.3 million BTC has been dormant for over a year. Currently, new issuance has fallen to less than 1000 BTC per day, and after the halving, less than 500 BTC will be able to enter the market. So the impact can also be halved.
Second, miner outflows were recorded within a visible range of 1000-3000 BTC until the start of the bear market in 2022. The continued decline in BTC price led miners to withdraw BTC from their reserves, increasing the outflow to over 16,000. BTC in November 2022. Additionally, mixed feelings emerged in 2023, with outflows decreasing to close to 1000 BTC but hitting new highs above 18,000 BTC. Interestingly, once the bulls regained control, miners began liquidating their reserves. As a result, outflows peaked at over 61,000 BTC in 2024.
The main reason to worry about the upcoming halving is because miners are continuously reducing reserves. Although it has fallen, it may not be enough to stabilize prices before the halving, triggering a healthy rise immediately after the halving. A reduction in compensation may also raise concerns about higher outflows, which may not be favorable for the market.
Lastly, overall market conditions have changed significantly as the 2021 bull market has attracted a huge amount of traders, influencers, institutions, and government entities. Moreover, global factors such as tensions between countries, restrictions, etc. can harm the cryptocurrency space. Therefore, we must be alert even at this moment, and we must not only consider past experiences but expect similar results.