The upcoming ‘halving’ event sends Bitcoin on a turbulent journey

18 views 4:15 pm 0 Comments May 17, 2024

Photo: Jose Cabezas (Reuters)

Bitcoin is currently experiencing a period of volatility as the impending Bitcoin “halving” event approaches. The leading cryptocurrency surged on Monday following the approval of spot Bitcoin ETFs in Hong Kong, only to retreat shortly after. Subsequently, the cryptocurrency sustained its downward trend on Tuesday morning, registering a drop of over 4% within a day, falling to below $63,000.

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This sentiment has reverberated throughout the cryptocurrency market. Ether, the second-largest cryptocurrency, was trading slightly above \(3,000 on Tuesday after undergoing a more than 4% decline in the past 24 hours. Solana faced a more severe situation, plummeting by 12% in a day and nearly 25% in a week, hovering around \)132. Doge, the prominent meme coin, also experienced a decline of over 5% on Tuesday, reaching $0.15, as reported by CoinMarketCap.

Ongoing Bitcoin Volatility

Bitcoin is poised to enter the halving phase around April 19, reducing the current mining rate from 6.25 Bitcoin to 3.125 Bitcoin. This marks a crucial aspect of the Bitcoin blockchain system, establishing a monetary mechanism that regulates inflation. Despite projections indicating a potential price surge for Bitcoin due to this significant event, the current price of Bitcoin remains highly volatile and is expected to continue in this manner leading up to the halving.

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In the midst of these developments, Markus Thielen, the founder of 10X Research, has adopted a bearish stance on Bitcoin’s price trajectory, citing diminishing prospects of Federal Reserve rate cuts and escalating bond yields, as per CoinDesk reports.

Challenges Faced by Bitcoin ETFs

While spot Bitcoin ETFs had propelled Bitcoin to new heights in the previous month, they are currently encountering significant outflows. In the last two days, only BlackRock’s iShares Bitcoin Trust (IBIT) has observed inflows, whereas all other Bitcoin ETFs have either experienced minimal inflows or outflows, according to Farside. On April 15, the iShares Bitcoin Trust (IBIT) recorded a net inflow of \(73.4 million, marking a decrease from the previous day’s inflow of \)111.1 million. Conversely, the Grayscale Bitcoin Trust (GBTC), which has consistently witnessed outflows over the past month, saw outflows amounting to $110.1 million yesterday.