The leading cryptocurrency, Bitcoin (BTC), is nearing its halving event, which has been significantly impacted by the ETF frenzy on the charts. Over the past three cycles, the halving has led to a substantial increase in volatility. Cryptocurrency experts are expecting a serious surge to all-time highs approximately 480 days after the halving, following a 30-40% sell-off. However, the introduction of spot Bitcoin ETFs could alter this scenario.
The Halving Process in BTC
In recent months, as the excitement for the upcoming halving has increased, there have been declines. However, these declines are weak compared to the standards of previous cycles. This time, Bitcoin’s corrections have been much more superficial and did not exceed 25%. BTC experienced only about a 15% drop before potentially leaping towards the $70,000 mark once again.
The recent quiet wave of selling could be a sign of a softer rally as the halving approaches. There is little doubt that Bitcoin will experience its customary post-halving sell-offs before definitely reaching new all-time highs. Similarly, the returns could be seen as much more exciting compared to traditional stockholders. However, do not expect the more than 600% price increase seen after the last halving in 2020.
Current Status of Bitcoin Holders
Two factors play a role here. Firstly, the percentage of long-term Bitcoin holders has reached a record of approximately 14 million BTC, which is more than 70% of the total circulating supply of 19,670,043 BTC. This is attributed to investors now turning to Bitcoin ETFs, the same investors and institutions that have poured trillions of dollars into S&P 500 ETFs. These are long-term holders with a minimum investment period of three years, and their decisions to buy or sell an investment are determined by long-term factors such as macroeconomic conditions, structural market changes, and long-term return potential. Despite slight declines in the pre-halving period, there is a strong belief that Bitcoin will reach historic peaks after the halving. The ratio of long-term Bitcoin holders has reached record levels, which correlates with the increasing interest in Bitcoin ETFs.
