Since the beginning of 2024, Bitcoin has been on an ascending path, recording considerable gains, especially in the context of the low and stagnating prices of the last two years. This means that investors are currently deciding where to buy Bitcoin before the rally picks up speed and transactions become more challenging. The coin reached new all-time highs, climbing well above $70K. Although some corrections intervened along the way and were actually expected, given historical trends show that losses always appear after significant gains, Bitcoin remained steadfast and regained much of its shed value soon after.
The emergence of the ETFs on the trading market after January 10th is largely believed to be the reason for the price growth, but with the next halving expected to arrive at the end of April, prices are likely to climb even higher. However, some investors and analysts have started discussing the possibility that considerable price corrections are on their way.
Pre-halving correction
The crypto environment is no stranger to volatility, and even a popular, well-known coin like Bitcoin is still susceptible to serious fluctuations. Corrections typically appear when there are signs that the market is becoming overheated and, therefore, unsustainable for most traders. Some say that the metrics indicate that these are the conditions the marketplace is recording at the moment and that a correction is inevitable. Historical data, one of the most important indicators in the crypto environment, shows that such an event occurring before a halving is not completely out of the ordinary. Something similar happened in 2020 ahead of the halving, when prices dropped by a considerable 20%.
Before the 2016 halving, there was an even more significant 38% halving. Nowadays, most traders believe such a strong retracement isn’t possible because the marketplace is much more stable and mature. Some have predicted that the lower price point might last for approximately 77 days but that the drawdown will be significantly less damaging compared to previous ones.
Overheated market
Volatility is a common thing in the crypto world, but when does it become too much? Although Bitcoin’s performance over the last few months has been nothing short of incredible and caused the trading community to become reenergized at the prospect of further market growth for all cryptocurrencies, steep climbs are also not sustainable in the long term. Apart from the obvious, there are several other signs that the market is becoming overheated. The TD Sequential, a complex tool that identifies the moments of price reversals and trend exhaustion, is one of the most prominent.
Analysts recently uncovered the fact that the indicator sent selling signals to Bitcoin’s 12-hour chart. The trend has been recorded since the beginning of February. Anytime it became more pronounced, the Bitcoin price dropped by anywhere from 1.6% to 3.5%. Although the price movements remained relatively short-term and didn’t harm the marketplace in the long run, investors must remain mindful of them as they can nonetheless have an impact on trading strategies.
Since the end of January, Bitcoin has remained stuck in a steady upswing position. Exchange-traded funds saw massive engagement, with capital flows nearing $60 billion by the first week of March. So, although the Bitcoin area is currently under the effect of growing prices and continues to break its own records, it is also showing signs of becoming overheated due to the sheer engagement of the crypto community. Miner profitability has also exceeded previous numbers, being at the highest level since December 2023. Some even believe that the miners are excessively overpaid. The unrealized profit margins recorded by traders are approaching the 60% level, numbers that are typically correlated with impending corrections.
Short-term holders are selling at the most elevated profit margins since the beginning of 2021, something that is generally believed to signify increasing selling pressure. The RSI, the Relative Strength Index, which measures the short-term momentum gathering on the market and shows the pace and direction of the most recent price changes, exhibits overbought conditions across most timeframes. As investors become greedier, a correction is bound to appear. Back in 2021, at the peak of the bull market, the index stood at a whopping 80. Soon after, the 2022 corrections arrived, resulting in losses of roughly 70% for the Bitcoin market that ushered in the emergence of the bearish trend across the crypto environment.
Underperforming
It seems odd to discuss the issue of underperforming when Bitcoin is doing so well and appears to have such sturdy price performance. In fact, it is for the first time in BTC’s history that it reached an all-time high way before the arrival of the halving. The fact that Bitcoin rallied so consistently ahead of this event led many to believe that historical data doesn’t apply in this instance and that investors cannot anticipate how the market will evolve this time. This is both a scary and an exciting prospect for the digital coins and tokens trading community, which is accustomed to risk.
Blockchain data indicates that Bitcoin has yet to set on the growth path of the previous halving cycles, meaning that all the gains that occurred so far have nothing to do with this event. If the trends of the past two cycles are repeated, BTC could get to anywhere between $100K to $300K, something that has not been seen in the crypto environment ever before. Most researchers believe Bitcoin has already tested the previous all-time high level of 2021, which stood at $69,000. According to the latest research, this level became the latest support level for Bitcoin, from which growth will continue.
The future
It’s impossible to say precisely what the future holds for Bitcoin as the marketplace is notoriously volatile, and no prediction can offer 100% accuracy. At the moment, even the most pessimistic outcomes show that Bitcoin is likely to trade around $150,000 in the aftermath of the halving. It’s entirely possible that it will take anywhere between five to twelve months for this level to be achieved, so investors might have to wait for 2025 to see these levels. But that also means that they still have plenty of time to consolidate their assets.
Data shows that all Bitcoin holders are in profit at the moment, so it is a good time to own BTC. If you’re new to the market, make sure to choose a sturdy strategy and don’t be deterred by the volatility. It is all part of the trading and can be mitigated by sound choices.
