Adjusting Strategy: Bitcoin’s Halving and the Unlikely 600% Return

With the Bitcoin halving approaching, the spotlight is on the cryptocurrency market. This time around, things are different. In the past, the halving event led to a significant increase in volatility, with a sell-off followed by a sharp rise to a new all-time high. But now, with the introduction of the spot Bitcoin ETF, the market dynamics have changed.

To understand where the price of Bitcoin is heading, we need to look at its volatility. In previous cycles, we saw deeper corrections of up to 40%. But this time, the corrections have been shallower, not exceeding 25%. The recent drawdown was only around 15% before Bitcoin bounced back towards the $70,000 mark. This suggests that the rally after the halving will be softer compared to previous cycles.

There’s no doubt that Bitcoin will experience a sell-off following the halving and will reach a new all-time high. The price increases won’t be as dramatic as the 600% gains seen after the last halving in 2020. This is due to two main factors. Firstly, the percentage of long-term Bitcoin holders has reached a record high. These holders have adopted a long-term investment strategy, withdrawing their Bitcoin from exchanges and holding onto it in cold wallets.

The second factor that has influenced the market is the arrival of the spot Bitcoin ETF. These ETFs are acquiring more Bitcoin supply than miners can generate. On average, spot BTC ETFs are taking in around 10,000 BTC per day, while miners are producing only 900 new BTC daily. This scarcity is contributing to upward price action. ETF investors are long-term minded, leading to a decrease in long-term volatility.

Despite the recent spike in volatility due to the halving event, it remains significantly lower than previous halvings. This is because the investors entering the spot Bitcoin ETF market are mostly long-term holders, similar to traditional equity investors. Their decisions are driven by macroeconomic conditions and long-term return potential.

Investors looking to profit from the halving will need to adopt a more traditional equity investor mindset. Monitoring the assets under management of spot Bitcoin ETFs will be essential, as well as considering the actions of long-term holders. The days of expecting 600% returns are over, but investors can expect steadier and more reliable returns.

This shift in market dynamics offers a more appealing prospect for most investors, as the extreme volatility of the past may no longer be present. It provides a trade-off between the potential for massive gains and the risk of significant losses. In essence, investors will have to adjust their strategies and look beyond the astronomical returns seen in the past.

7 thoughts on “Adjusting Strategy: Bitcoin’s Halving and the Unlikely 600% Return

  1. The Bitcoin halving used to be exhilarating. Now it’s just a letdown.

  2. The scarcity created by spot Bitcoin ETFs is definitely contributing to the upward price action. 📈✨

  3. I’m glad the days of expecting massive 600% returns are over. Steadier and more reliable returns sound much more appealing to me.

  4. Traditional equity investors? I thought Bitcoin was supposed to be something different. Now it’s just becoming boring.

  5. Spot Bitcoin ETFs are bringing a new wave of investors into the market, transforming it in a positive way. 🌊✨

  6. I can’t believe we’re just supposed to settle for softer rallies now. Where’s the fun in that? 🎢

Leave a Reply