It is red everywhere in the crypto market. Bitcoin (BTC), the leading digital asset, has witnessed a monthly correction of 17%, ending a seven-month bullish streak. A 14% correction in the last week, and an 8% dip maintained in 24 hours, placed BTC at $57,258 on Wednesday.
An earlier report suggested that Bitcoin price could dive further below support at $60,000 in search of a post-halving bottom. Potential liquidity levels include $56,000 and $52,000.
Investors eyeing Bitcoin ahead of the potential bull run in 2024 should consider several reasons to buy Bitcoin, including the halving, ETF, and the prevailing technical market structure.
1. Bitcoin Halving
The third Bitcoin halving occurred on April 20. It effectively reduced miner rewards to 3.125 BTC per block from the previous 6.25 BTC. Halving is a process, Satoshi Nakamoto engraved in the blockchain to ensure the continued production of new BTCs while upholding the digital asset’s scarcity principle.
This significant reduction in new Bitcoins from daily production of 900 BTC to 450 BTC gradually crunches supply. On the other hand, demand is expected to increase, creating optimum conditions for a parabolic rally.
Apart from an immediate short-lived increase in Bitcoin price after halving, the event’s impact happens several months later, triggering an exponential breakout often to new historical highs.
With this new halving, Bitcoin is expected to rise above $100,000 lifting altcoins like Ethereum and Solana. Investors looking forward to the bull run may want to dollar cost average (DCA) starting May 1. Such a move is encouraged seeing that Bitcoin trades at a significant discount from the ATH high of $73,737, according to CoinGecko data.
2. Bitcoin ETFs Impact on Bitcoin Price
The uptake of ETFs after their approval in January was the biggest force behind Bitcoin price rally to new all-time highs. However, the bullish trend waned weeks ahead of the halving in April, leaving Bitcoin in the hands of the bears.
As discussed on Monday, the total daily net outflow had increased to $81 million, led by Grayscale’s GBTC’s withdrawals. The outflow volume had slowed to $51 million on Tuesday, bringing the cumulative net inflow to $11.94 billion according to data by SoSoValue.
The impact of the ETF on BTC price cannot be overemphasized seeing that it improves sentiment for digital assets in the market. A turnaround in the volume to green is expected to pamper the trend and ignite new buy orders from investors and traders currently sitting on the sidelines.
As supply narrows due to the halving and demand increases because of the ETF, Bitcoin price might move to unprecedented levels. Early entrance into positions allows investors to maximize gains in the long run.
3. Bitcoin Price Weakening Technical Outlook, A Bullish Signal?
Bitcoin price appears to be balancing at the high of a high cliff. With the $60,000 support that bulls depended on since last week obliterated, it is a matter of time before BTC retests the next key level at $52,000.
Key technical indicators highlighted a tweaking technical structure, increasing the probability of declines to and possibly to $50,000. A sell signal from the Moving Average Convergence Divergence (MACD) indicator encourages traders to focus on shorting BTC in the short term.
The almost oversold Relative Strength Index (RSI) at 37 signals rising selling pressure and the possibility of more traders choosing to short BTC to profit in the short term.
Oversold conditions would also mean that Bitcoin price is closing in on a potential trend reversal. In other words, buying Bitcoin on May 1 could soon turn the positions profitable even though more declines may be experienced below $60,000 in the coming days.
Bottom Line
The bearish outlook in the crypto market is both a blessing and a pain for many investors. Those who bought BTC close to the top must be prepared and brace for the winter until the asset recovers. At the same time, this is a potential time to seek exposure due to discounted prices and maximize gains in the long term.
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