With fewer than 300 blocks remaining until Bitcoin’s fourth halving, speculation has been rife, with many expecting a ‘sell the news’ scenario following an 11% drop in bitcoin prices. On the other hand, this downturn might just be the precursor to a shakeout and a subsequent significant uptick. Large holders, often known as ‘whales’, are sometimes suspected of selling on rumors to accumulate more of the asset at lower prices.
Bitcoin’s 4th Halving Draws Near
If you’ve been monitoring the chatter, you’ll know there’s been widespread speculation about the forthcoming halving and its potential impact on bitcoin (BTC) prices. Currently, with just two days until the reward reduction event, BTC has fallen more than 11% against the U.S. dollar this past week. In the months leading up to the halving, there was significant speculation that BTC might decline post-halving. Indeed, BTC’s value has soared over 100% in the past year.
Over the past 12 months, BTC has risen 107% between April 17, 2023, to April 17, 2024. It reached an all-time price high of $73,794 per unit on March 14, 2024.
Recently, JPMorgan analysts predicted that BTC prices could drop to $42,000 after the halving. Led by Nikolaos Panigirtzoglou, these market strategists have also recently highlighted potential risks in the cryptocurrency market. Arthur Hayes, a BTC bull and former CEO of Bitmex, anticipated a “slump” in BTC prices around the halving. Others have labeled the halving a ‘sell the news’ event, where crypto assets drop following the release of ostensibly positive news.
The approval of U.S. spot bitcoin exchange-traded funds (ETFs) was also called a ‘sell the news’ event. Yet, the launch of spot BTC ETFs proved to be a ‘sell the rumor’ scenario, with bitcoin prices soaring to record highs once the ETFs began trading and accumulating BTC. Large BTC whales are familiar with selling on rumors, potentially offloading their holdings in anticipation of a price drop triggered by market rumors, thus securing profits before a potential fall.
Significant selling by whales can instill fear, uncertainty, and doubt (commonly known as FUD) among smaller investors, leading to panic selling. This reaction can trigger a price drop, which large holders may exploit to repurchase the asset at a reduced price for strategic advantage. Whales might also engage in ‘sell on the rumor’ tactics as a form of risk management.
The atmosphere has been pessimistic, occasionally described as a ‘bear trap.’ The crypto market and BTC’s current conditions may mislead bearish traders into expecting continued losses, though that may not be the outcome. These traders could short sell the asset, anticipating a further decline in bitcoin’s price. However, if the asset’s price unexpectedly rises, those who shorted or sold their BTC would need to repurchase at higher prices to cover their positions and mitigate losses.
It remains uncertain which direction the market will take, but the halving could very well be either a ‘sell the news’ or a ‘sell the rumor’ event. As we near the halving, the actions of bitcoin ‘whales’ could significantly influence the market’s next moves. Whether this event signals a strategic reshuffling by astute investors or a broader market shift is yet to be determined. Stakeholders should keenly observe these developments, as the outcome could define bitcoin’s path in the ensuing months, presenting both new opportunities and challenges.
“[Bitcoin] Halving sell the news scenario,” the X account Capt. Parabolic Toblerone wrote. “[Bitcoin] may be repeating the same pattern as Dec-2023 to Jan-2024. Halving could be a similar event as spot ETF approval and may have similar effects. Position yourself accordingly. In this case Altseason top further delayed till mid July-24,” the trader said.
“Imagine we retrace all of ETF move as a ‘sell the news event’ then we bottom and head to $120k,” another person said. “Massively unpopular opinion: The next Bitcoin halving has the potential to be a sell-the-news event,” the X account Justin Bennett remarked. “Maybe not directly, but I doubt it has the bullish impact traders have come to know. It’s a widely-known event that you can literally mark on your calendar. There are countdown clocks everywhere, and markets are forward-looking. Also, notice how every halving has occurred well below the previous cycle high until now.”
He added:
We’re days away from the next [Bitcoin] halving and sitting just shy of the previous cycle peak. Another piece of history in the making is this retest of the previous cycle high following a monthly close (March) above. Bitcoin has never done this before.
Bennett noted that veterans in the crypto world understand that BTC rarely presents opportunities for second-chance purchases after major price movements. If such an opportunity arises, it’s often wise to refrain from acting. He emphasized that this isn’t to suggest that bitcoin is likely to turn bearish, since certainty is never a given in financial markets.
What do you think about the outcome post-halving? What variables do you see? Share your thoughts and opinions about this subject in the comments section below.
