BTC volatility is a sign that traders are questioning Bitcoin halving positions: Beam CEO

Much of Bitcoin's recent volatility is a sign that traders are considering whether they have priced in the upcoming halving – and that's completely normal, Beam CEO Andy Bromberg told Decrypt.

“What happens is that people tend to drag out the price rise narrative in the months before they buy,” he said. “And then, right before the halving, everyone experiences this crisis of faith and you get into this fluctuating volatility.”

Bromberg now appreciates the market there. In the last week alone, the Bitcoin price rose to over $73,000, reached a new all-time high and then fell below $62,000.

According to data from CoinGecko, Bitcoin price is currently sitting at just under $65,000, having lost 3% over the past day.

Bitcoin halving, as the name suggests, halves the rate at which new Bitcoins are rewarded to miners. This has happened three times since Bitcoin was introduced in January 2009.

According to NiceHash, at the time of writing, it looks like the next halving will occur on April 27th. However, since the halving is scheduled after a certain number of blocks have been mined on the Bitcoin network, it is difficult to determine exactly.

For the same reason, the arrival time on a GPS fluctuates during travel. It is always recalculated assuming that you (or your bike or car) continue traveling at your current speed for the rest of the trip. But of course that is not always true or possible.

At the start of last week, in the run-up to Bitcoin hitting a new all-time high and understandably high Bitcoin volume, the NiceHash countdown showed that the halving would occur as early as April 15th.

The Bitcoin Halving and Price

When the rate at which new Bitcoins enter the market halves every four years, it typically triggers a price rally.

Before the first halving on November 28, 2012, the Bitcoin price experienced a significant increase. Since Bitcoin's launch in January 2009, its price had risen from less than a penny to $12.

In the months following the halving, the price continued to rise and finally exceeded the $100 mark for the first time in April 2013. This was partly due to the growing awareness and acceptance of Bitcoin.

In the months leading up to the second halving on July 9, 2016, the BTC price was relatively stable. However, after the halving, the price of Bitcoin experienced a slow but steady rise, culminating in a dramatic increase, reaching an all-time high of $19,783.06 in December 2017.

Before the third halving, on May 11, 2020, the price experienced volatility and a significant decline. The COVID-19 pandemic had led to social distancing orders and by March 2020, uncertainty was taking its toll on the economy. After the halving, the price began to recover and experienced a significant rally from the end of 2020 to 2021, when it rose to $69,000 and set a new all-time high.

But Bromberg said there are a few reasons why this halving is different than all the others.

“The demand is unlikely [for Bitcoin] “That will change,” he said. “Especially with ETFs.” Now there is this completely new demand driver. We have looked at these inflows over the last few days and they are significant.”

According to CoinGlass, US spot Bitcoin ETFs purchased nearly 36,000 BTC last week alone. Things were more subdued this week as there were four straight days of net outflows due to a flash crash on Monday.

There have been predictions that the ETF-induced halving and continued demand could trigger a liquidity crisis, but Bromberg is unconvinced. Especially because many of the ETF investors do not tend to be long-term, dogmatic investors. In his experience, they buy and sell stocks to suit their portfolio.

“I think broadly the Bitcoin markets, particularly at this point in time, and particularly in ETFs and futures, are deep and liquid,” he said. “There’s not really a liquidity problem.”

Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers