Bitcoin prices remained stable at $66,300 as of Monday afternoon GMT, despite the recent halving event. The geopolitical tensions between Iran and Israel have had a more significant impact on the market than the halving, according to Mick Roche of Zodia Markets. Experts note that bitcoin's correlation with the broader stock market is increasing, with factors such as regulatory developments and retail trading activity influencing its price action.
Bitcoin Market Exhibits Resilience Amidst Halving Event and Geopolitical Developments
London, February 14, 2023 (GMT) - The cryptocurrency market witnessed a relatively subdued impact from the scheduled Bitcoin halving event on Monday, February 13th. As of 1415 GMT, Bitcoin (BTC) traded at $66,300, showing a modest increase of 1.2% since the previous week's close and a 3.4% gain on Monday. This subdued performance defies the initial market expectations that the halving, a pre-programmed event that occurs every four years and reduces the supply of new Bitcoins entering the market, would lead to significant price volatility.
Market analysts attribute the lack of pronounced impact from the halving primarily to the overshadowing influence of geopolitical events, particularly the recent easing of tensions between Iran and Israel. "The unfolding geopolitical landscape is exerting a more significant influence on the market than the halving event itself," observed Mick Roche, Senior Trader at Zodia Markets, the cryptocurrency arm of Standard Chartered.
Meanwhile, global stock markets exhibited a recovery on Monday, as investors cautiously reversed their defensive positions taken amidst fears of a larger Middle East conflict. Eric Demuth, CEO of Austrian cryptocurrency broker Bitpanda, highlighted the growing correlation between Bitcoin and the broader market sentiment, noting the absence of discernible retail trading patterns specific to the halving event. "Cryptocurrencies are becoming increasingly intertwined with traditional financial markets," he remarked.
Last year, the excitement surrounding the potential approval of spot Bitcoin exchange-traded funds (ETFs) in the United States played a significant role in Bitcoin's recovery from a series of market downturns in 2022. Ben Laidler, Global Markets Strategist at eToro, believes that the focus for Bitcoin now lies in its "institutionalization." While retail investors currently dominate Bitcoin trading, Laidler anticipates that future regulatory changes could pave the way for companies, banks, and central banks to acquire and hold Bitcoin.
Moreover, the combined value of all cryptocurrencies remains a relatively niche asset class, hovering around $2.5 trillion, according to data from CoinGecko. Regulators have consistently cautioned investors about the speculative and volatile nature of cryptocurrencies, emphasizing their limited practical applications.
As the cryptocurrency market continues to evolve, investors are keeping a close eye on the U.S. Securities and Exchange Commission (SEC) for potential approval of spot ETFs for Ether (ETH), the second-largest cryptocurrency. However, both Demuth and Roche expressed skepticism that such approvals may materialize in the near future. "The hopes for May are diminishing," Demuth acknowledged.