Key Points
- Bitcoin holders may face short-term pressure due to increased selling around the halving event.
- Bitcoin’s halving did not lead to a massive sell-off, but the market may see volatility in the short term.
Bitcoin’s recent halving event did not result in a massive sell-off as some market participants had feared. The $60k support zone held strong on the 19th of April.
Since the dip to $59.6k, prices have climbed by 9% at press time.
Long-term Whales and Profit Ratio
According to a post by CryptoQuant CEO Ki Young Ju, we are not close to this cycle’s top. The Unrealized Profit Ratio metric showed that long-term whales were only at a 234% profit.
Comparing the 2020-21 cycle to the 2017-18 rally, the long-term whales’ profit was more than 1700% in 2017. This raises the question of a further drop in whale profits during this cycle’s top.
Market Sentiment and Volatility
Crypto analyst Ali Martinez drew attention to the sentiment around Bitcoin as it reaches its peak. Based on the NUPL metric, we have not yet reached the “euphoric” phase that usually accompanies a Bitcoin top.
While the long-term outlook argues for higher prices, there is scope for volatility in the short-term. Data from CryptoQuant noted that miners were sending less Bitcoin to exchanges in the past month.
One possibility is that miners were hoarding Bitcoin to sell after the halving, since their rewards would be cut in half. This could cause significant downward pressure on the market.
Halving Event and Market Reaction
The halving event on the 19th of April is an event the whole market has known about for years. The aftermath is not as simple as rewards dropping to 3.125 BTC per block mined.
The crux of the problem is the multitude of other factors in play, all of them revolving around supply and demand, and public sentiment toward Bitcoin.
A shift in public sentiment occurs relatively late in Bitcoin’s cycle. Bitcoin usually captures public attention close to or after the NUPL euphoria phase.
As things stand, the asset appears massively undervalued in the long-term.
A more pessimistic outlook would conclude that this cycle would be far shorter and not as parabolic as the ones that came before. In either scenario, the roller coaster ride has not yet had its quota of air time. So strap in and hold on.
