The market dynamics for Bitcoin’s post-4th-halving era are currently positive, suggesting that investors anticipate higher prices and miners are adjusting their strategies well.
According to the new Bitfinex Alpha report, bitcoin (BTC) selling by long-term holders has not yet led to the typical pre-halving drop, suggesting that new market entrants are absorbing the selling pressure efficiently.
Miners Adjust Strategies
The halving, which has enhanced bitcoin’s scarcity over time, has reduced its daily supply to $40-$50 million. Analysts expect these numbers to drop further to $30 million per day, including active and dormant supply and miner selling, especially as smaller miner operations are forced to shut down amid the struggle for profitability.
Bitcoin miners are currently adjusting their operational strategies to accommodate the reduction in block rewards and support their businesses against the decrease in revenues following halvings.
“Historically, during Bitcoin halvings, a common pattern emerges where miners exert significant selling pressure in an effort to maximize profits before an anticipated decrease in earnings. This strategy, while aimed at optimizing returns in the face of reduced block rewards, can have a short-term negative impact on the market, potentially leading to increased volatility and price declines,” analysts said.
However, miners appear to have executed their selling earlier by offloading their Bitcoin reserves ahead of the halving. As a result, there has been a significant plunge in the amount of bitcoins sent to exchanges. This suggests that miners are engaging in pre-emptive selling or the collateralization of their holdings to upgrade their infrastructure.
Bitfinex said this move from miners was advantageous in the short term, preventing a market shock at halving and spreading potential selling pressure from such entities over a more extended period.
BTC to Surge on ETF Demand
Bitfinex analysts also found that the market dynamics for all crypto assets have evolved since previous halvings, potentially reducing the effect of new BTC issuance in market prices. The crypto exchange attributed the shift to rising demand and broad acceptance of Bitcoin exchange-traded funds (ETFs).
Spot Bitcoin ETFs are expected to play a vital role in shaping market volatility due to their ability to attract large inflows and trigger outflows. A combination of constrained supply from the halving and high ETF demand could propel the price of BTC higher.
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