Leading experts in the cryptocurrency space are expressing concerns about a potential crash in the prices of Bitcoin and altcoins following the upcoming Bitcoin halving event. They suggest that any immediate rally might not materialize for several months.
The price of Bitcoin dropped significantly after reaching an all-time high, unable to sustain its momentum and breaching key support levels at around $68,300 and $63,400. Analysts had foreseen a potential decline below $60,000 before a consolidation phase, anticipating a subsequent upward rally following the Bitcoin halving. Today, Bitcoin’s price fell to a low of $59,768. Now, the question arises: Could the Bitcoin halving event spark a sudden shift in sentiment, leading to a significant rally across the cryptocurrency markets?
Bitcoin and Ethereum Options Expiry
As Bitcoin’s halving approaches on April 20, the expiration of over $2 billion worth of Bitcoin and Ethereum options on Friday adds to the anticipation. This includes 21,000 BTC options valued at $1.35 billion and 27,785 ETH options valued at nearly $0.81 billion. With Bitcoin and Ethereum trading below their respective max pain points of $66,000 and $3,150, market volatility is on the rise.
The real test awaits during the monthly expiry on April 26, with over 88,000 BTC options worth $5.5 billion set to expire. Ethereum options valued at $2.6 billion are also due to expire. Experts predict heightened market activity with the potential for Bitcoin to trade below $60,000 post-halving.
Source: Deribit
Bitcoin Historical Pattern
Ahead of the Bitcoin halving, a pre-halving selloff reminiscent of past events has been observed. Historically, it takes several months for Bitcoin’s price to stabilize following halving events. Experts, including Elja Boom, foresee a bearish trend in Bitcoin’s second and third quarters. Despite this, long-term projections remain optimistic, with expectations of a price target exceeding $150,000 for Bitcoin and $12,000 for Ethereum.
Fed Rate Cut Delay and Macro Uncertainty
Macroeconomic factors, such as inflation data and Federal Reserve policy decisions, are influencing market sentiment. Recent reports suggest a delay in Federal Reserve rate cuts, prompting shifts in market expectations. With inflation rates higher than expected, Bitcoin’s price faces downward pressure, with projections indicating a potential dip below $60,000.
Iran-Israel Tensions
Geopolitical tensions between Iran and Israel have further exacerbated market volatility, resulting in substantial losses in the crypto market. These tensions, coupled with a strengthening US dollar and rising Treasury yields, have contributed to Bitcoin’s decline to $60,000.
BTC ETF Outflow
The outflow of funds from Bitcoin ETFs reflects waning institutional interest and tax-related considerations in the United States. This trend, coupled with declining ETF buying activity, suggests a temporary downturn in market sentiment.
Bank Runs Due to BTFP End
The cessation of the Bank Term Funding Program (BFTP) has raised concerns about liquidity in the banking sector. Banks reliant on BFTP support face potential liquidity shortages, reminiscent of previous bank failures in March 2023. This development adds to short-term bearish sentiment in the markets.
In Summary
Over $2 billion worth of Bitcoin and Ethereum options are due to expire this Friday, followed by another $8 billion on April 26. Historical patterns indicate a potential decline in Bitcoin’s price to under $60,000 by the end of April. Analyst Markus Thielen suggests that Bitcoin could drop below $60,000, even reaching $52,000, amidst concerns over rising inflation. Escalating tensions between Iran and Israel add to market uncertainty. Additionally, the slowing inflow of funds into Bitcoin ETFs and the potential for a bank run due to the end of the Bank Term Funding Program (BTFP) contribute to the cautious outlook.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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