(Kitco News) – While stock markets have at least managed to return to neutral following yesterday's losses, crypto proponents are still waiting for digital assets to decide whether to enter the halving with a bang or a whimper. The $62,000 area has proven to be a turning point for Bitcoin (BTC), with King Crypto repeatedly bouncing off support near this level before recovering and then falling back to support.
Bitcoin could break either way
Data provided by TradingView shows that Bitcoin fell into the $61,700 area three times during trading on Tuesday. While this support level has been held so far, there has been a worrying trend that has seen BTC set lower highs throughout the session.
BTC/USD Chart from TradingView
At the time of writing, Bitcoin is trading at $62,747.75, down 1.10% on the 24-hour chart.
Stocks are fighting for a draw
Stocks pulled back from their own downtrend on Tuesday, but none of the three U.S. benchmark indexes could muster positive momentum after Federal Reserve Chairman Jerome Powell responded to a possible rebound by saying the interest rate cuts would actually decrease.
At the closing bell, the S&P and Nasdaq ended marginally lower, down 0.21% and 0.12% respectively, while the Dow posted a gain of 0.17%.
BTC on exchanges could dry up by January
According to a new report from crypto exchange Bybit, this week's halving is unique and unprecedented due to the recent addition of US spot Bitcoin ETFs, and the end result could be By January 2025, Bitcoin will no longer be available on any exchange.
“Bitcoin began recovering in early October last year (2023), about six months before the upcoming halving in April 2024,” Bybit said. “But also in October, major traditional finance giants began applying to run Bitcoin spot ETFs.”
Since ETF trading began, all centralized exchanges have been depleting Bitcoin reserves faster than in any other cycle, and this new demand is expected to continue as TradFi ramps up its sales force and markets the funds to cash-rich retirees and other investors.
“With only 2 million Bitcoins left and we assume a daily inflow of $500 million into Bitcoin spot ETFs, around 7,142 Bitcoins will leave the foreign exchange reserves every day, which suggests that it will only take a while.” nine months to use up any remaining reserves,” the analysts wrote.
“Bitcoin is seeing early signs of a short squeeze,” they wrote. “After the halving, the supply shortage will reportedly be even worse. Investors tend to HODL their Bitcoin positions when they are held in cold or decentralized wallets. Bitcoin spot ETFs are typically offered through centralized exchanges (CEXs), where successful investors realize their lucrative positions or successful miners sell their recent profits.”
“As mining rewards are halved post-halving, the sell-side supply flowing into CEXs will be reduced,” the analysts said.
The Bybit analysts also pointed to data showing that miners are selling their reserves at a much faster rate in the lead-up to this halving than they were before the 2020 halving. This too could exacerbate the post-halving supply shortage and lead to rapid depletion of CEX reserves .
“In the meantime, Web 2.0 advertising will focus on the Bitcoin halving, which will result in FOMO-driven behavior from new investors,” they said.
Bybit concluded with some advice based on their analysis.
“[I]“It is wise to take profits six months after the halving, towards the end of 2024,” they wrote. “The past cycle suggested a 12-month window after the halving. And yet, we saw stronger forward movement before the halving, which limits the scope for gains after the halving.”
Altcoins follow the leader downwards
The majority of the top 100 altcoins lost value again on Tuesday as Bitcoin's ongoing decline has angered most market participants in the digital asset space.
Daily cryptocurrency market performance. Source: Coin360
Celestia (TIA) led the gainers with a 14.50% increase on the 24-hour chart, followed by Memecoin Pepe (PEPE), which gained 6.14%, and Fantom (FTM), which rose 4, 05% increased.
Pendulum (PENDLE) led the losers with a -10.98% decline, followed by a -10.41% decline for Ondo (ONDO) and a -8.77% decline for Ethena (ENA).
The total cryptocurrency market cap is currently $2.29 trillion and Bitcoin’s dominance rate is 53.88%.
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