Bitcoin Down 14% from Halving Event: What Happens from Here
Three posts ago, we discussed the intricate relationship between Bitcoin’s halving events and broader economic conditions. The recent market developments have indeed proven this connection, as Bitcoin has experienced a significant 14% drop since the halving event on April 20th 2024.
Context of the Recent Market Crash
Several factors have contributed to Bitcoin's recent decline:
1. Macro-Economic Conditions: The Bank of Japan's rate hike on July 31, 2024, significantly impacted global markets. This move made borrowing more expensive, disrupting the carry trade involving the yen and causing a ripple effect across various asset classes, including cryptocurrencies.
2. Market Sentiment and Sell-offs: The anticipation of Mt. Gox creditor repayments, releasing around $8 billion worth of Bitcoin into the market, created fear among investors, prompting a sell-off that drove prices down to as low as $53,600.
3. Broader Equity Market Decline: Global equity markets have also been under pressure, with major indices experiencing significant losses. This broader market downturn has influenced Bitcoin's price, as investors often sell off riskier assets during periods of economic uncertainty
It's Not All Doom and Gloom
Over the long term, Bitcoin has always shown resilience and growth, particularly in the years following a halving event. Historically, Bitcoin's price tends to experience significant increases 6-12 months after each halving. This pattern has been consistent across the previous three halving events:
2012 Halving: Bitcoin surged from around $12 to over $1,000 within a year.
2016 Halving: Bitcoin climbed from approximately $650 to nearly $20,000 within 18 months.
2020 Halving: Bitcoin soared from $8,000 to over $60,000 in the following year.
These historical trends indicate that despite short-term volatility and market downturns, Bitcoin has a strong track record of long-term growth. This resilience is driven by the fundamental principle of reduced supply through halvings, which creates scarcity and can drive demand.
Position Update from Our Trend Model
The Model had gone cash one day prior to the sell-off, resulting in a small loss of 6% from the long entry price back in July, the model was however able to avoid what was to come after that, which was a 20% drawdown within 72 hours. The model remains bearish for the medium term and we'll update in another post when the time comes.
As always, it is crucial to conduct thorough research and consider both macroeconomic factors and market sentiment when making investment decisions. Stay tuned for more updates and insights as we continue to monitor the evolving market conditions and their impact on primarily crypto 🚀.
Context of the Recent Market Crash
Several factors have contributed to Bitcoin's recent decline:
1. Macro-Economic Conditions: The Bank of Japan's rate hike on July 31, 2024, significantly impacted global markets. This move made borrowing more expensive, disrupting the carry trade involving the yen and causing a ripple effect across various asset classes, including cryptocurrencies.
2. Market Sentiment and Sell-offs: The anticipation of Mt. Gox creditor repayments, releasing around $8 billion worth of Bitcoin into the market, created fear among investors, prompting a sell-off that drove prices down to as low as $53,600.
3. Broader Equity Market Decline: Global equity markets have also been under pressure, with major indices experiencing significant losses. This broader market downturn has influenced Bitcoin's price, as investors often sell off riskier assets during periods of economic uncertainty
It's Not All Doom and Gloom
Over the long term, Bitcoin has always shown resilience and growth, particularly in the years following a halving event. Historically, Bitcoin's price tends to experience significant increases 6-12 months after each halving. This pattern has been consistent across the previous three halving events:
2012 Halving: Bitcoin surged from around $12 to over $1,000 within a year.
2016 Halving: Bitcoin climbed from approximately $650 to nearly $20,000 within 18 months.
2020 Halving: Bitcoin soared from $8,000 to over $60,000 in the following year.
These historical trends indicate that despite short-term volatility and market downturns, Bitcoin has a strong track record of long-term growth. This resilience is driven by the fundamental principle of reduced supply through halvings, which creates scarcity and can drive demand.
Position Update from Our Trend Model
The Model had gone cash one day prior to the sell-off, resulting in a small loss of 6% from the long entry price back in July, the model was however able to avoid what was to come after that, which was a 20% drawdown within 72 hours. The model remains bearish for the medium term and we'll update in another post when the time comes.
As always, it is crucial to conduct thorough research and consider both macroeconomic factors and market sentiment when making investment decisions. Stay tuned for more updates and insights as we continue to monitor the evolving market conditions and their impact on primarily crypto 🚀.
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