Cryptocurrency traders are expecting significant volatility in the price of Bitcoin in the months leading up to and following the network's next halving.
The price of Bitcoin may experience significant changes in the coming months, due to the impact that several important developments will have on the crypto market.
The possible approval of Bitcoin spot ETFs this week, inflation data in the United States and the arrival of the fourth halving on the blockchain network, estimated for mid-April, are some of the events related to the cryptocurrency, which could influence the price of BTC to be more volatile.
Cryptocurrency trader Rekt Capital believes that the upcoming Bitcoin halving will benefit the cryptocurrency in the long run. However, BTC's volatility in the months leading up to this event may be very high, he anticipated.
On the social network X, formerly Twitter, Rekt Capital highlighted that the Bitcoin halving could be discounted in the BTC price in five stages.
The upcoming halving will be a catalyst for Bitcoin's price
Historically, the proximity of the halving tends to increase BTC price volatility in the market, the crypto analyst commented. It is possible that in the next two months, starting now, the price of Bitcoin will experience a deep pullback, creating a period that, in Rekt's opinion, will be a crucial opportunity for investors to be able to acquire BTC at a "bargain" price.
Following this potential pullback, about 30 to 60 days before the halving, there may be a rebound in the price of BTC, produced by the hype surrounding the halving and the “buy the news” effect on this event.
Traders who take advantage of these stages will then look to profit from this rally, fueled by the hype around Bitcoin. The “selling the news” effect will cause a further decline in the value of the cryptocurrency on the market that could last for several weeks, according to the crypto analyst’s estimates.
Rekt Capital commented:
“In 2016, this pre-halving pullback was -38% deep. In 2020, this pre-halving pullback was -20% deep.”
The cryptanalyst also said that Bitcoin's price action leading up to a halving event often produces a period of “re-accumulation” of the cryptocurrency, as many investors tend to become overwhelmed and impatient with the volatility and lack of significant returns on their Bitcoin investment immediately after the event.
However, the latter stage of the halving effect on BTC price tends to push the cryptocurrency higher. After the halving, Bitcoin price is usually well positioned to experience accelerated growth and break new all-time highs, the analyst noted.
BTC is expected to reach new all-time highs
The price of Bitcoin could reach new all-time highs in the months following the halving, due to the reduction in supply that the arrival of this event will produce.
PlanB, who goes by the username @100trillionUSD on X, believes that a half-million-dollar price for Bitcoin is not as far-fetched as many believe. On the social network, the institutional investor said that in 2015, when he bought his first BTC, the price was around $400 per unit and people were saying that the cryptocurrency was “dead.” Later in 2019, when the price of BTC rose to $4.000, he wrote an article about his S2F model, anticipating that the cryptocurrency would reach $55.000 per BTC. “People said I was crazy,” he said.
Now, with Bitcoin priced at around $40.000 per unit, he noted that his S2F model predicts the cryptocurrency could grow exponentially, reaching $532.000, after this year’s halving. “People say it’s impossible.”
Other traders and investors consider a $500.000 BTC price point for the current cycle to be a very exaggerated prediction.
@PhoenixBTC7 responded PlanB saying that a value of half a million would be feasible in the long term. He emphasized that Bitcoin must first break the $100.000 level.
What is the Bitcoin halving?
Halving is a process that halves the Bitcoin block reward, and is programmed into the blockchain protocol to occur every 210.000 blocks, or approximately every 4 years.
This is a crucial process to control the issuance of new bitcoins, affecting the supply and demand of the cryptocurrency in the market. The upcoming halving that will take place on the network will reduce the block reward for miners from 6,25 BTC to 3,125 BTC.
Historically, halvings have had a positive impact on the price of Bitcoin and cryptocurrencies.
At the time of writing, there are approximately 100 days and 15.200 blocks left to mine until the fourth block reward halving event on the Bitcoin network.
Continue reading: Bitcoin miner Cipher Mining prepares for the arrival of the new halving
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