The upcoming Bitcoin halving event which is expected to occur in April 2024 has fostered a bullish sentiment as the price of Bitcoin surged to the $72k price before retracing back to $69k price.
According to Bloomberg, the event which is considered as one of the most eagerly anticipated in the crypto market has driven up the price of the digital asset.
Bitcoin has seen a 50 percent increase in value this year, despite experiencing a decline from its all-time high of $73,798 on March 14th. The surge is attributed to the approval of ETFs by the US Securities and Exchange Commission (SEC) in January this year.
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Reports reveal that Bitcoin miners are accumulating rather than liquidating their holdings as they anticipate a bullish market. This expectation of price increase has potentially driven prices higher.
It is understood that Bitcoin Halving events is historically heralded by a significant price increase, attributed to reduced supply and heightened scarcity. Past events have ushered in a bull run in prices, due to the reduction in supply.
However, several analysts have warned against overly simplistic expectations of post-halving price surges, pointing out that Bitcoin’s price trajectory over the past 15 years has been shaped by a myriad of external factors such as monetary policies, economic trends, the stock market, etc.
Co-founder and former CEO of crypto exchange BitMEX and the chief investment officer at Maelstrom, Arthur Hayes said Bitcoin will probably face selling pressure in the days before and after the mining-reward halving due April 20, a supposedly bullish event.
He wrote via a blog post,
“The narrative of the halving being positive for crypto prices is well entrenched. When most market participants agree on a certain outcome, the opposite usually occurs. That is why I believe Bitcoin and crypto prices in general will slump around the halving.
“Given that the halving occurs at a time when dollar liquidity is tighter than usual, it will add propellant to a raging firesale of crypto assets. The timing of the halving adds further weight to my decision to abstain from trading until May”.
Also, several other analysts have argued that the supply slowdown is priced in and the market could correct following the halving event. They predict that the crypto market is expected to go through volatility amid the halving event, urging investors to remain vigilant and closely monitor the digital asset.
In a bid to mitigate risk, reports reveal that professional traders are turning to options strategies. This approach allows for leveraging positions with a relatively small upfront deposit, sidestepping the direct risk of liquidation prevalent in futures markets.