Bitcoin (BTC) price shed almost 12% of its value since it reached an 11-month high, roughly at $31,068 on April 14. The largest crypto is trading slightly above $27,500 on Monday as market participants remain conflicted on the direction it is likely to take next.
Short-term price action aside, one analyst believes the Bitcoin price grand rally has just commenced and has the potential to climb to $50,000 by the second quarter of 2024, bolstered by the network’s four-year halving cycle.
Bitcoin has grown its value by more than 70% since December 31, a move that saw it erase all the losses triggered by the implosion of FTX exchange in early November. The move to above $30,000 although highly celebrated by bulls and crypto enthusiasts, lacked the required momentum to sustain the uptrend.
Now, Bitcoin is struggling to hold support above $27,500, with CoinDesk suggesting the dip may have been occasioned by the persistent growth yield on the 10-year United States Treasury notes by another six basis points to 3.58%.
The two-week gain in a row could have slowed down investor appetite for high-risk asset classes like BTC and other cryptocurrencies. Ethereum has also erased all the gains accrued following the Shapella software upgrade. The largest smart contracts token traded at $1,850 on Monday, after shedding 12.5% in a week.
Nevertheless, analysts like Simon Peters with eToro in a Monday note said that despite the drop, Bitcoin price was “yet to see more precipitous levels that would suggest the recent rally is finished,” CoinDesk reported.
How Far Can The Next Halving Cycle Propel Bitcoin Price?
According to Bloomberg Intelligence and Matrixport, the halving event could ignite another 78% rally in Bitcoin.
Halving is an event in the Bitcoin network that occurs every four years when the rewards for mining Bitcoin are cut in half. This means that miners receive only 50% of the rewards they were receiving previously.
Bitcoin’s halving is meant to control inflation by limiting the supply of new Bitcoins being issued into circulation. The event is programmed into the Bitcoin protocol and has happened thrice so far, in 2012, 2016, and 2020.
The next Bitcoin halving is expected to occur in April 2024, which will reduce the rewards for mining a block from 6.25 BTC to 3.26 BTC. Bitcoin price has hit new record highs with every halving event that has occurred so far.
Based on insight from Jamie Douglas Coutts, a Bloomberg Intelligence analyst Bitcoin’s fourth halving cycle is already 50% priced in, which means the largest crypto can rally to $50,000 by 2024.
“Bitcoin cycles bottom around 12-18 months prior to the halving and this cycle structure looks similar to the past ones, albeit many things have changed — while the network is vastly stronger, Bitcoin has never endured a prolonged severe economic contraction,” Coutts said.
The Bitcoin rally since January has sputtered lately with the speed brakes attributed to the Federal Reserve’s change of tune on interest rate hikes in spite of the persistent rise in inflation.
Pressure on Bitcoin and cryptocurrencies is also coming from the ongoing crackdown on crypto following the collapse of Sam Bankman-Fried’s FTX exchange and the banking crisis in the US that saw three crypto-friendly banks go out of business.
The FTX Implosion Marked The Bottom for Bitcoin
If market participants consider the FTX saga to have marked the Bitcoin bottom, Jacob Joseph, an analyst at CCData reckons that “history would suggest that we still have approximately 350 days of ‘accumulation’ before witnessing the characteristic post-halving breakout price action.”
Bloomberg Intelligence analyst Coutts is not the only one predicting a meteoric rise in Bitcoin price based on the halving event, as Markus Thielen, research head at Matrixport foresees BTC climbing to $65,632 by April 2021, which is more than double the prevailing market value.
At the current market level of $27,500, Bitcoin price is $41,500 down from its record high of almost $69,000 in November 2021. The previous all-time high was achieved 18 months after Bitcoin’s 2020 halving event.
The crypto market has suffered heavy blows in 2022 as central banks around the world tighten the monetary policy to curb inflation that had shot to the roof during the pandemic. Terra USD (USD)’s crash in May and the FTX’s messy exit further dampened the prices, leaving investors in massive losses.
“Bitcoin may once again reach a new all-time high in the future, however, it is unlikely to see the same growth as previous cycles due to increased market size and competition from other digital assets,” CCData’s Joseph said.
Evaluating Bitcoin Price Profitability This Week
Every investor is currently taking every Bitcoin price prediction with a grain of salt and that is expected following the most recent liquidations amid the drop from $31,068. In this section, we look at BTC’s short-term outlook to investigate the next possible move either above $30,000 or a drop to $20,000.
As shown on the daily chart, Bitcoin price is holding firmly above the 50-day Exponential Moving Average (EMA) (line in red) at $27,309. Interestingly, this is a confluence support formed by the moving average and an ascending trendline.
Bulls must keep BTC above the confluence support at all costs if they would like to immediately push for the resumption of the uptrend above $30,000.
However, we cannot ignore the sell signal as presented by the Moving Average Convergence Divergence (MACD) indicator. Note that this call to sell BTC came into play after the MACD line in blue crossed below the signal line in red.
If the momentum indicator upholds the ongoing drop below the mean line at 0.00 into the negative region, Bitcoin price could be fighting a losing battle above the immediate support, as provided by the 50-day EMA.
“A healthy retest of the support zone between $25K to $27K is a positive sign for a continued move up,” DiPasquale, CEO of BitBull Capital told CoinDesk in an emailed statement. “As long as Bitcoin manages to stay above $22K, in the worst case, we can expect more upward action.”
DiPasquale’s statement implies that a Bitcoin drop to $22,000 would still be considered a healthy pullback. But before that, bulls may try their luck at rebounding from higher levels like the buyer congestion at $26,00 and the 200-day EMA at $24,000.
Michaël van de Poppe, one of the most followed analysts and traders on Twitter, says Bitcoin has a higher chance of ticking up to $28,800 as opposed to dropping to $25,000. In his opinion, the pivotal level is $27,800, where Bitcoin price is expected to attract more liquidity to propel the next move above $30,000.
Doctor Profit, another well-known trader and analyst opines that Bitcoin bottomed at $18,000 although the FTX collapse, saw it dump to $15,400. “For now, it’s chop and entering in the most boring price action that you can imagine,” he warned.
“If the market allows (BTC) to visit $20.000 again it’s a huge buy signal for those that missed out to accumulate in this region. Keep in mind that the next halving is in one year and I am expecting to see the next bullrun in one and half years from today, Doctor Profit continued.
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