Bitcoin fell below $70,000, with heightened volatility ahead of April's halving. Bitcoin's 30-day annualized realized volatility exceeded 60%, its highest since August 2022. While halvings often lead to price increases, analysts caution that the market may have already priced it in. However, the upcoming halving is unique, with Bitcoin hitting an all-time high before it, potentially creating a supply crunch and driving bullish sentiment.
Bitcoin Volatility Surges Ahead of Anticipated Halving, Raising Concerns and Bullish Sentiments
As the highly anticipated Bitcoin halving draws near, the cryptocurrency market has witnessed a surge in volatility, with Bitcoin's price slipping below the $70,000 mark on Monday morning.
Bitcoin currently sits at around $69,565, marking a 1.1% decline for the day but still maintaining a 4% gain over the week, according to data from CoinGecko. This price fluctuation comes amid increased uncertainty surrounding the upcoming block reward halving scheduled for or around April 20.
To gauge Bitcoin's volatility, analysts often refer to its 30-day annualized realized volatility, which has recently surged to a high of 63.76%, remaining above 60% by the end of last week. This figure, obtained from Glassnode data, represents the highest level since August 2022 and reflects the increasing price risk associated with the cryptocurrency over the specified period.
According to Andy Bromberg, CEO of Beam, this recent volatility is indicative of a "crisis of faith" among traders leading up to the halving. Every four years, the halving event reduces the block reward allocated to miners by 50%, serving as a mechanism to regulate the distribution of Bitcoin's fixed supply capped at 21 million. The upcoming halving will witness mining rewards dropping from 6.25 BTC to 3.125 BTC.
Historically, Bitcoin halvings have often been followed by price surges. However, some analysts caution that this anticipated price increase may already be factored into the market. A recent Coinbase report suggests that previous price rallies have also coincided with broader macroeconomic events, such as the COVID-19 pandemic and subsequent lockdowns, leading to extremely loose monetary policies and substantial fiscal stimulus.
One unique aspect of the 2024 halving is Bitcoin's attainment of an all-time high price ahead of the event, largely driven by the approval of multiple US spot Bitcoin ETFs in January. This, coupled with the halving's reduction in new Bitcoin supply, could potentially result in a supply crunch, which some analysts view as a bullish indicator for Bitcoin's price trajectory as the halving approaches.
As the Bitcoin halving draws closer, investors are eagerly watching the cryptocurrency's volatility and price movements, anticipating the potential impact on the market. While historical trends and expert opinions offer insights, the outcome remains uncertain, leaving investors cautiously optimistic and closely monitoring the unfolding events.
