Bitcoin’s post-halving behavior: trends and analysis

Will Bitcoin’s price rally in the aftermath of the halving, or are there factors that could potentially impede its upward momentum?

The much-anticipated event, the fourth Bitcoin (BTC) halving, has finally taken place, marking a new milestone in BTC’s journey. 

A halving event occurs approximately every four years, resulting in a 50% reduction in the number of Bitcoins awarded to miners for validating transactions. 

With this recent halving, the reward has reduced from 6.25 BTC to 3.125 BTC per block.

Following this latest halving, Bitcoin is trading relatively flat. As of Apr. 23, Bitcoin is exchanging hands at $66,500 levels, representing a 3.5% gain in the preceding twenty-four hours.

The 840,000th block on the Bitcoin network, the halving block, was successfully mined by ViaBTC. This earned the miner over 40 Bitcoins, equating to more than $2.6 million in block rewards and fees. 

Now, with the halving behind us, the focus shifts to what lies ahead for Bitcoin. Where might its price lead, and what can we anticipate in the coming days? 

Let’s delve into these questions to gain a clearer understanding of Bitcoin’s post-halving situation.

Where could BTC head next?

As Bitcoin enters its post-halving phase, several key indicators offer insights into its potential direction. 

Recent data from a Bitfinex report indicates a notable uptick in BTC outflows from centralized exchanges, reaching levels not seen since January 2023. 

This surge suggests a shift in investor behavior towards accumulation, driven by the anticipation of price appreciation following the halving event.

Moreover, analysis of Bitcoin supply movements reveals a transitional phase, marked by a decline in activity among long-term holders (LTHs) and an increase in transactions involving newer investors. This decrease suggests that LTHs may be capitalizing on profits.

Meanwhile, the influx of newcomers is reflected in the Market Value to Realized Value (MVRV) ratio for short-term holders (STHs), which remains below historical peak thresholds, indicating room for further growth.

The successful absorption of supply from LTHs could bolster the bullish outlook for Bitcoin, potentially shoring up critical price levels from a structural standpoint. However, the likelihood of this scenario remains uncertain.

Will the BTC price increase?

Traditionally, Bitcoin prices have experienced upward momentum for months after a halving event. However, this time, we can expect a deviation from the norm due to several key factors.

One notable difference is the compressed nature of the price cycle surrounding this halving. 

Unlike previous cycles, Bitcoin has already witnessed substantial surges and even reached new record highs prior to the halving. This accelerated growth path may alter the typical post-halving gains.

Meanwhile, regulatory approvals for Bitcoin investment products, such as spot Bitcoin ETFs, have injected optimism into the market. 

The recent approval of ETFs in Hong Kong, coupled with previous approvals in the U.S., has facilitated regulated retail investment in Bitcoin, potentially mitigating market volatility.

However, Bank of America projects inflation to reach 4.8% by the 2024 election, heightening concerns. 

Recent CPI data, averaging 0.4% monthly inflation, signals a persistent uptrend, potentially surpassing the Fed’s 2% target by a large margin. 

The possibility of delayed rate cuts due to strong CPI figures may bolster the dollar’s value. In such scenarios, investors might favor traditional assets like the dollar over crypto, impacting demand for BTC.

Furthermore, the lingering impact of soaring living costs in various parts of the world, such as Argentina and Turkey, where inflation is at record high levels, could leave many investors with limited disposable income, dampening their willingness to invest heavily in Bitcoin. 

As economic and geopolitical situations loom, investors must remain cautious about allocating large capital to Bitcoin. 

What to expect next?

Amid wide-ranging sentiments, analysts are buzzing with predictions and observations about BTC’s next moves. Some are eyeing ambitious targets, while others are cautious.

One analyst has been steadfast in their focus on a major target range for Bitcoin: $80,000 to $85,000. However, they acknowledge that the potential for Bitcoin to climb even higher remains on the table.

Meanwhile, another analyst remains bearish in their analysis, noting the yet-to-be-reached $58,000 target for Bitcoin. 

In contrast, renowned analyst Michaël van de Poppe described this halving as “the most boring price action.” 

However, he interprets this as a positive sign, suggesting that the subdued volatility hints at the potential for altcoins to take center stage in the next phase of market development.

While excitement and optimism prevail, it’s crucial to exercise caution. Remember, never invest more than you can afford to lose.