Key Points
- Bitcoin’s price dropped 13% in the past 48 hours, a move attributed to overheated market conditions ahead of the Bitcoin halving event.
- A report by CryptoQuant suggests the Bitcoin bull cycle is not over due to relatively low levels of new investment flows and price valuation metrics.
In the last two days, the price of Bitcoin (BTC) has seen a 13% decrease, falling from its record high of $73,835 to around $60,000. This correction is believed to be a result of an overheated market, a phenomenon analysts are calling a “pre-halving retrace” before the impending Bitcoin halving event, which is approximately 30 days away.
Bitcoin Bull Cycle Not Over Yet
CryptoQuant’s report indicates that the Bitcoin bull cycle is still in progress. This conclusion is based on the relatively low investment flows from new investors and price valuation metrics that remain below levels observed during past market peaks. According to CryptoQuant, 48% of Bitcoin investment is coming from short-term holders, while a typical bull cycle ends with 84%-92% of investment from these new investors.
The data also shows that this metric is now at levels similar to mid-2019 when Bitcoin experienced a significant correction. Furthermore, valuation metrics are still below levels that would indicate a market peak.
Bitcoin Halving Event Approaching
Another major factor that could impact Bitcoin’s price is the upcoming Bitcoin halving event. This event, which is expected to occur in less than 31 days, could potentially boost Bitcoin’s price. The halving event will result in the miner block rewards being reduced by 50% from 6.25 BTC to 3.125 BTC.
Historically, Bitcoin’s halving has been accompanied by a rise in Bitcoin’s price. Standard Chartered Bank has predicted that Bitcoin’s price could increase from $100,000 to $150,000 in 2024. The bank also anticipates that Bitcoin’s price could reach a cycle peak of $250,000 in 2025 before settling around $200,000.
While the bank’s analysis is not solely based on the halving event, it does take into account the strong performance of Bitcoin ETFs since they began trading on January 11 and the different dynamics they bring to the market during this halving cycle.
