In the previous two days, there was a significant reversal in the cryptocurrency market. The downturn began on a red (negative) Friday, and continued with a devastating drop on Saturday.
Despite ongoing debate about the causes, which appear unrelated to the industry, the market capitalization collectively lost over $400 billion at one point.
As the upcoming Bitcoin halving approaches, which is often seen as a trigger for price growth, some are wondering if this marks the final significant decrease in block production before it gets cut in half once again.
Was This Correction Normal?
Over the weekend, Bitcoin’s value dropped from $71,000 to $65,000 initially, and then plunged further to a low of approximately $61,000. The first decrease was attributed to the most recent Federal Reserve announcements, while the second decline was caused by increasing conflict in the Middle East and Iran’s response against Israel.
Regardless of the causes, Bitcoin dropped approximately $10,000 in value. Alternatively coins endured larger losses, with multiple double-digit declines over both the 24-hour and 48-hour periods. The overall crypto market capitalization decreased by around $460 billion since early Friday morning, reaching its lowest point on Saturday night.
In the past, Bitcoin’s price has typically decreased prior to each halving event, a trend some experts consider normal based on historical data. Similarly, Arthur Hayes of BitMEX anticipated a potential price correction.
#BTC is down 16% from the highs.
So far, this is a normal drop. In fact, we’ve had several 20-22% drops this cycle.
BUT
This time it could develop into something more.
Thread
— Benjamin Cowen (@intocryptoverse) April 13, 2024
Recovery?
BTC has previously responded in a similar way during heightened geopolitical conflicts between countries. For instance, its value dropped significantly two years ago following Russia’s invasion of Ukraine. However, according to Willy Woo, the cryptocurrency swiftly regained nearly all its lost value within a short timeframe.
#BTC down 10% immediately at the outbreak of the Iran – Israel war.
Looking at this historical graph I created during the onset of the Russia-Ukraine conflict, it indicates a drop of approximately 10% as well. However, the recuperation transpired in a matter of days.
— Willy Woo (@woonomic) April 14, 2024
According to Alex Kruger’s perspective, Bitcoin’s price fluctuations in the near future may heavily depend on the actions of Israel and Iran. If tensions ease and a resolution is reached, Bitcoin could experience a quick recovery. However, if the situation escalates into an all-out war, Kruger predicts that the cryptocurrency’s price will drop significantly.
Iran attacked Israel. Wild volatility again . This is not about neither charts nor fundamentals. This is about war, headlines, and managing risk smartly. If war escalates, we are going much lower. If there is no follow-up from Israel, we recover the entire dump. Hard to imagine…
— Alex Krüger (@krugermacro) April 13, 2024
Looking Ahead
This significant adjustment enabled some shrewd investors to boost their Bitcoin holdings. According to Lookonchain, whales have been quite busy, with one withdrawing approximately $40 million in Bitcoin. Their activity has been noticeable over the past month, possibly in preparation for the upcoming halving event.
This whale withdrew 598 $BTC($37.78M) from #Binance again after the market dropped.
Over the past few days, with the Bitcoin price falling from its March 14 peak, a significant player (referred to as a “whale”) has withdrawn a large amount, specifically 10,158 Bitcoins or roughly $680.83 million, from Binance at an average purchasing price of about $67,026 each.
Address: 1L7gnfBJhK9ZwUcw2Lx93BPHmcd1tsxeTs
— Lookonchain (@lookonchain) April 14, 2024
Every approximately four years, or after the mining of 210,000 blocks, an event occurs that decreases the production of new blocks by half. The upcoming event, scheduled for April 19, will result in a decrease in rewards from 6.25 BTC per block to 3.125 BTC per block.
When the production of a specific asset decreases while demand stays constant or rises, its price typically increases. This could explain why Bitcoin’s price has risen after each previous halving, leading some in the community to expect further price surges. Many forecasts suggest Bitcoin reaching prices between $150,000 and $200,000 within the next year.
Despite history not being a reliable predictor of Bitcoin’s future price movements, it’s important to note that the cryptocurrency experienced a significant drop of $10,000 only five days before its halving event. It remains uncertain whether this dip represents a buying opportunity or the beginning of a more extensive correction.
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2024-04-15 04:14