Is the price of Bitcoin approaching its peak due to halving?

On recent days when the price of the stock market has risen, Bitcoin (usually a risky asset) has not followed suit, indicating a break with past behavior and perhaps a sign that Bitcoin is nearing its peak.

It is currently sitting just above $69,000, which should convince investors that there is more room left in the price.

Bitcoin fell to nearly $59,700 after hitting an all-time high of $69,200 in early March. In mid-March, it hit a new all-time high of about $74,000, making that level a regional high.

During the drop to $59,700, $1 billion was taken out of the market. BlackRock’s Bitcoin ETF set trading records, including attracting $3.8 billion in trading volume. As Bitcoin prices plummeted, open interest fell by $1.46 billion (-12%) in just a few hours.

However, at this point in the current cycle, the falling Bitcoin price is causing overly leveraged positions to falter. Selling pressure in this range is likely the result of profit taking at historic highs from long term whales as well as miners.

For example, in 2010, one whale sold 1000 bitcoins, or $68 million in one hour. On March 1, 2024, the Bitcoin giant moved 2,000 Bitcoins sold since 2010, four days after Bitcoin surpassed $69 million per coin on March 5. The same holder transferred another 1,000 Bitcoin in 2010.

After hitting an all-time high, Bitcoin led to a market-wide sell-off. More than $1 billion was liquidated and Bitcoin fell to $60,800 before rebounding to $67,000 in the Asian morning.

Sustained and significant demand for spot Bitcoin ETFs could send Bitcoin to $100,000 in a rather short period of time. Moreover, a decision on the spot Ether ETF is expected by May 23 and will have a major impact on that market and the broader cryptocurrency market.

Bitcoin’s near-term fate is now tied to the upcoming halving event, which will see mining rewards halved from 900 bitcoins to 450 bitcoins. With average daily inflows reaching and exceeding $500 million, Bitcoin ETF demand will certainly outpace this new production level, resulting in even more scarcity. Demand is high from individual and institutional investors. On-chain Bitcoin activity has exceeded levels not seen since 2022.

We have not seen the end of new money flowing into Bitcoin via ETFs. For example, money managers may have to wait before investing in a new ETF to begin entering the market. Future price predictions include multi-million dollar predictions backed by the Winklevoss twins and others. Ark Invest CEO Cathie Wood predicts $1 million Bitcoin price in the future.

It’s no wonder why there’s so much excitement about the world’s first digital currency. The Bitcoin ETF was one of the most successful ETF launches of all time. Most notably, BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity Bitcoin Fund (FBTF). If ETFs were to buy 100% of net new supply on a regular basis, it would revolutionize Bitcoin market dynamics and make million-dollar Bitcoin predictions come true.

Where does Bitcoin go from here?

As the price of Bitcoin approaches its peak, major news networks feature and hype it globally. The launch of the Bitcoin ETF has certainly created a buzz, but the bubbles of past bull markets have yet to return to this market. At the end of the bull markets of 2013, 2017, and 2021, FOMO even took over retail consumers. Currently, such hype only exists for X and the cryptocurrency space in general.

The Bitcoin ETF launch is the largest launch in ETF history. 11 new Bitcoin ETFs attracted a record $673 billion in inflows on February 28 alone and have since surpassed that total.

This has created massive new demand for Bitcoin because when investors buy Bitcoin ETFs, their funds have to go out and buy Bitcoin. Likewise, if an investor sells a Bitcoin ETF, the fund must sell Bitcoin.

At one time, Bitcoin ETFs were purchasing an average of 3,500 to 4,300 coins each day. This is significantly more than the roughly 900 coins created each day. When the next Bitcoin halving occurs at the end of April, that number will be reduced to 450 Bitcoins mined per day. Therefore, there may not be enough supply to keep up with the new demand.

Natural supply/demand dynamics alone are enough to drive prices higher. It remains to be seen whether the number of sellers in this range will be sufficient to offset the new ETF funds. So far, Bitcoin price has endured continued outflows from the GBTC ETF.

Bitcoin remains a risky asset today, despite its potential to become a digital mold asset in the future. Bitcoin continues to hit higher lows on the 10-year chart. From where it begins until it declines, a bear market continues to make higher lows and higher highs.

Bitcoin has already achieved tremendous results in 2020, starting with its current price of $15,000. During the current run, Bitcoin crossed the $70,000 handle to hit a new all-time high after facing resistance at its all-time high of $69,201.

Also read: How will Bitcoin ​​halving in 2024 affect prices, mining rewards and future trends?