Bitcoin bull cycle ‘far away’ due to halving – CryptoQuant Research
Over the past 48 hours, the price of Bitcoin (BTC) has dropped 13% from a new all-time high of $73,835 to briefly trade around $60,000. The correction occurred due to overheated market conditions, which analysts have dubbed a “pre-halving rebound” ahead of Bitcoin's halving event, which is about 30 days away.
However, the CryptoQuant report shows that the Bitcoin bull cycle is far from over, with relatively low investment flows from new investors and valuation metrics still at levels seen at the previous market peak.
On-chain data analyst firm “Weekly Crypto Report” shows that 48% of Bitcoin investment comes from short-term holders. According to CryptoQuant analysts, “bull cycles typically end with 84%-92% investment” from these new investors.
“Bitcoin's bull cycle is still far from over, as evidenced by the relatively low level of new investment flows.”
The chart above also shows that this metric has reached the same level as in mid-2019 (52%), when Bitcoin experienced a meaningful correction, indicating that short-term traders should keep an eye on it.
The CryptoQuant report also revealed that valuation metrics are below par in line with past market bests.
“CryptoQuant P&L Index is still outside the market's high zone (red area) and above the index's 1-year moving average.”
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CryptoQuant's PnL Index is made up of three on-chain indicators that show Bitcoin's profitability. The index previously indicated that the crypto market will enter a bull cycle in 2024, however, as the chart above shows, the current level is slightly below what was recorded in the bull runs of 2013, 2017 and 2021 when the market reached its peak.
Bitcoin's halving event is just one month away
In addition to the parameters discussed above, the upcoming Bitcoin halving event is the main driver that is expected to strengthen the BTC price and lead to a parabolic growth.
According to CoinMarketCap's halving countdown, Bitcoin's next halving event is less than 31 days away.
With approximately 4,450 blocks remaining, the remaining time shows that Bitcoin's fourth halving will take place on April 20, with mining block rewards dropping by 50% from 6.25 BTC to 3.125 BTC.
Historically, a halving of the Bitcoin supply has been associated with an increase in the price of BTC. The halving has always preceded a significant bull run in the Bitcoin market.
Standard Chartered Bank has made a bold prediction by raising its BTC price forecast from $100,000 to $150,000 in 2024.
In an investment note issued to clients on Monday, March 18th, analysts at Standard Chartered Bank wrote:
“For 2024, given the higher-than-expected year-over-year price gains, we see the possibility that prices will reach $150,000 by the end of the year, compared to our previous estimate of $100,000.”
The bank also predicted that the price of BTC would hit a cycle of around US$250,000 in 2025 before settling around US$200,000.
Although the bank's analysis is not entirely based on the halving event, it does reflect the impressive performance of the spot's bitcoin exchange-traded funds since they began trading on January 11, and the various changes that this halving cycle brings to the market.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
