New analysis from market intelligence firm Glassnode indicates that financial institutions and ‘smart money’ are playing a role in Bitcoin’s (BTC) price action as the halving approaches.
In a new article, Glassnode says the top crypto asset by market cap surged 1,000% during its first halving, 200% during its second, and 600% during the third.
The next halving is expected roughly on April 19th and will see BTC miners’ rewards cut in half.
“These significant upswings highlight the event’s potential to drastically affect supply-demand dynamics and consequently, market pricing. As we approach the fourth halving, these historical patterns offer valuable insights for forecasting potential market movements and preparing investment strategies accordingly.”
According to Glassnode, in the past, halving events pushed up the crypto king’s price due to the newly issued supply being cut in half, giving a boost to demand. However, this time around, Glassnode says BTC’s price may experience volatility due to three key factors.
“Historically, halvings have led to major market rallies by cutting the supply of new Bitcoins, thus potentially increasing prices due to higher demand.
However, this time, the dynamics are further complicated by heavy institutional involvement through ETFs (exchange-traded funds) and notable shifts in the activities of long-term investors and ‘smart money’ entities.
These factors collectively suggest a more nuanced market response to the upcoming halving:
- ETF Activities: It’s essential to monitor ETF inflows and outflows carefully. A decrease in ETF purchases could signal an impending market downturn.
- Market Dynamics: Increased selling by long-term holders might indicate a nearing market peak, impacting overall market stability and price levels.
- Halving Psychology: Be wary of potential sell-the-news effects surrounding the halving event. Traders should consider strategic adjustments to their positions to navigate expected volatility.”
Bitcoin is trading for $60,578 at time of writing, a 2.17% decrease during the last 24 hours.
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