Bitcoin market volatility remains bullish post-halving: Bitfinex

Bitcoin's post-Q4 market volatility is currently positive, indicating that investors are anticipating higher prices and miners are adjusting their strategies well.

According to the latest Bitfinex Alpha report, selling by long-term holders of Bitcoin (BTC) has yet to return to the typical pre-half decline, suggesting that new market entrants are effectively absorbing the selling pressure.

Miners adjust strategies

The halving, which has driven Bitcoin's scarcity ever higher, has reduced its daily supply to $40-50 million. Analysts expect those numbers to drop to $30 million a day, including active and dormant supply and mining sales, especially as smaller mines are forced to shut down in the struggle to return to profitability.

Bitcoin miners are adjusting their operating strategies to accommodate the reduction in rewards and to prevent a drop in revenue following the halving of their businesses.

“Historically, during Bitcoin halvings, a common practice has emerged where miners make a strong selling push before a significant decline in revenue. This strategy aims to facilitate returns in the face of reduced block rewards, but can have a short-term negative impact on the market, leading to increased volatility and price volatility. It could lead to a downturn, analysts said.

However, miners appear to have sold their bitcoins early, dumping their bitcoin reserves before the halving. As a result, there has been a significant drop in the amount of Bitcoin sent to exchanges. This indicates that miners are either pre-selling or selling their holdings as collateral to improve infrastructure.

Bitfinex said this activity from miners was beneficial in the short term, halving the market shock and preventing the spread of selling pressure from such entities in the long term.

BTC to grow on ETF demand

Bitfinex analysts have found that the market volatility of all crypto assets has evolved since the previous halves, which may reduce the effect of new BTC on the market price. The change in cryptocurrency is due to the growing demand and acceptance of Bitcoin exchange-traded funds (ETFs).

Spot Bitcoin ETFs are expected to play a significant role in shaping market volatility due to attracting large inflows and triggering outflows. A combination of halving supply and high demand for ETFs could drive up the price of BTC.