The Bitcoin price has recently experienced heightened volatility, causing the largest cryptocurrency in the market to briefly drop below the significant threshold of $60,000 for the first time since March 5.
This price decrease comes just days before the highly anticipated Halving event scheduled for Friday. This event has traditionally been viewed as a positive catalyst for Bitcoin’s value due to its impact on token supply.
However, market participants are questioning whether the Halving’s effects are already factored into the current market conditions, leading to extended bearish sentiment.
Long-Term Bullish Outlook Prevails
Bitcoin’s decline saw it plummet by 5% to $59,890, though it recovered some losses shortly afterward. Since reaching an all-time high (ATH) of $73,700 on March 14, the Bitcoin price has now retraced by approximately 18%.
The downward trend extended to other major cryptocurrencies, including Ethereum (ETH), Solana (SOL), and Dogecoin (DOGE), which also experienced slumps on Wednesday.
The impending Halving, a quadrennial code update in Bitcoin, has raised concerns among investors as to whether it will be a significant market-moving event or a non-event overshadowed by other factors, such as the ongoing discussions surrounding the Bitcoin ETF market, which has seen a significant decrease in terms of outflows.
Nathanaël Cohen, co-founder of INDIGO Fund, noted that market participants are de-risking due to this uncertainty and the additional macro factor of tensions in the Middle East involving Israel and Iran, putting further pressure on risk assets.
The recent decline in Bitcoin’s price was further exacerbated by a wave of liquidations in long positions for digital assets. Last Friday alone, approximately $780 million worth of bullish crypto wagers were liquidated within 24 hours.
Despite the recent market turbulence, some participants maintain a bullish long-term outlook for Bitcoin. Some see the recent liquidations and subsequent flushing out of leverage in the crypto market as a positive development.
Ravi Doshi, head of markets at FalconX, reported increased buying of longer-dated call options on their derivatives desk, suggesting that clients anticipate higher prices in the latter half of the year.
Bitcoin Price Rebounds Above $61,000
Following the brief dip below the $60,000 mark, the Bitcoin price has rebounded, currently trading at $61,600. This recovery is viewed as a bullish sign, with the cryptocurrency’s macro uptrend structure remaining intact as long as price levels of $51,000 and $42,000 are maintained.
The market is closely watching whether the theory suggesting that the Halving price catalyst is already factored into the current market conditions holds. Additionally, the performance of Bitcoin ETFs in the United States and their potential impact on driving the cryptocurrency’s price back to previous highs are of significant interest.
Furthermore, the recent approval of the spot Bitcoin ETF market in Hong Kong is expected to contribute to increased adoption of the leading cryptocurrency. Although some experts do not consider it as significant as the US ETF market, it is anticipated to generate a surge in price and further strengthen Bitcoin’s position.
Ultimately, the outcome of the Halving event, combined with the developments in both the US and Hong Kong ETF markets, remains uncertain. The ability of Bitcoin to regain its bullish momentum and drive increased demand will be closely monitored.
Featured image from Shutterstock, chart from TradingView.com