Key Points
- Bitcoin price briefly surpasses $65,000 before halving, despite investor caution and net outflows from ETFs.
- Market sentiment remains cautious and a post-halving price correction is possible.
Bitcoin (BTC) experienced a modest recovery recently, registering a 5% increase just before the digital currency’s halving event.
This slight increase occurred in spite of the fact that spot bitcoin exchange-traded funds (ETFs) have been experiencing a series of net outflows. Over the past five trading days, U.S. spot bitcoin ETFs have seen outflows totaling $641 million. ETF inflows during the same period were only $321 million, resulting in a net negative flow of $320 million. This represents the longest streak of net outflows in a month, occurring just before the expected bullish halving event.
Bitcoin’s Performance and Market Sentiment
The largest digital asset by market capitalization rose by approximately 5% in the past 24 hours, trading at $65,331. However, due to market volatility, the price quickly fell below the $65,000 mark. The GM 30 Index, which represents a selection of the top 30 cryptocurrencies, saw a 3.74% increase to 130.64 in the past 24 hours.
Despite this, the market sentiment leading up to the Bitcoin halving was generally positive until a week ago. Many analysts anticipated a price surge following the event. This optimism was partly driven by Bitcoin surpassing its 2021 cycle high before the halving, reaching a new all-time high of over $73,000 in mid-March and attracting increased interest from institutional and retail investors.
However, according to Jag Kooner, Head of Derivatives at Bitfinex, the risk-on market sentiment has overshadowed the previous excitement about the Bitcoin halving. “It remains to be seen if the macro conditions will affect fundamentals but sentiment is decidedly more cautious now than it had been just a week ago,” Kooner stated.
Post-Halving Predictions
Duncan Ash, Head of Strategy at Coincover, believes that the upcoming halving will result in elevated prices until value increases deter new investors. “This will then restore a closer balance between the number of buyers and sellers and settle the market. In addition, the industry will emerge with more users, a higher market cap, and greater liquidity,” Ash said.
However, David Han, an analyst at Coinbase, suggested that investors should not dismiss the possibility of a Bitcoin post-halving price correction. “Given the elevated levels of realized year-to-date volatility, a further move downwards is well within the realm of possibility. That said, options pricings and onchain metrics still indicate constructive cyclical positioning even as traders appear to be preparing for possible chops lower in the near term,” Han commented.
