What Bitcoin Stripping Means After BTC ETF Approvals
Crypto Twitter has considered and considered approval of the position of Bitcoin (BTC) exchange-traded funds (ETFs) in the United States.
After some uproar over a fake tweet from the US Securities and Exchange Commission, all 10 Bitcoin ETFs have been approved.
The ETF hangover is over, and attention can now shift to the next big event: the Bitcoin halving. The biggest Bitcoin event is less than 100 days away. Past halves are directly related to Bitcoin bull runs, but could the position of Bitcoin ETFs affect the price of BTC during this half cycle, disrupting short and long term Bitcoin price predictions?
What is Bitcoin Half?
Bitcoin halving is an event that happens roughly every four years, which slows down the rate at which new BTC units are generated and mined by miners in the Bitcoin network. In particular, the reward miners receive for confirming and adding new blocks is halved.
The initial reward started at 50 BTC per block, and was halved after each halving event. The most recent halving occurred in May 2020, reducing the reward to 6.25 BTC per block. The next Bitcoin halving, which is expected to happen in mid-April 2024, will reduce Bitcoin mining rewards to 3.175 BTC per block.
This process is captured in the Bitcoin protocol. It is designed to create scarcity by mimicking the scarcity of precious metals like gold. The cryptocurrency community closely monitors halving events, as they affect the total supply of Bitcoin and may have implications for market volatility and cryptocurrency value.
Bitcoin is a relatively young digital asset with a short history. Many fundamentalists struggle to put a fair value on its supposed novelty and revolutionary factors.
Looking at Bitcoin's history, halvings have had a consistent effect on Bitcoin's price.
In the year Mid 2012: Bitcoin is dead.
The first halving took place on November 28, 2012 and reduced the block reward from 50 to 25 BTC. At the time of the halving, the price of BTC was 13 dollars, the next year it rose to 1,174 dollars.
In the year In 2012, Bitcoin was not taken very seriously by the mainstream. He was popular with the cypherpunks who developed the technology from its infancy. After the price of BTC crossed the $1,000 mark, it became a trading tool for the digital asset.
What many don't understand is that Bitcoin, being an intangible intangible asset, was considered dead after its price rebounded to $200. In the coming years, the phrase “Bitcoin is dead” will be common in the media, but the digital asset survived.
2016 Halved: The Retail Speculation Bubble
The second half of the decline turned Bitcoin from an underground currency into a legitimate asset class. Half of them happened in 2012. on July 16, 2016, which reduced the block reward to 12.5 BTC. During the halving, the price was $664; The following year, it peaked at nearly $20,000.
Retail investors jumped into the new wave of altcoins, spurred on by initial coin offerings (ICOs), made possible thanks to the new features offered by the Ethereum blockchain. ICOs flooded the market, but many were incomplete projects, and some were outright scams, which brought a lot of criticism to the crypto market in general.
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The rise after this halving was considered a retail speculative bubble. However, Pandora's box has already been opened, and the blockchain industry will be cut in half.
Halving 2020: The advent of smart money
When the third halving arrived on May 11, 2020, reducing the block reward to 6.25 BTC, the BTC price was $9,734. A new all-time high (ATH) came the following year at $69,045.
This semi-cycle has attracted the attention of billionaire investors such as Paul Tudor Jones and Michael Saylor, co-founder and CEO of software company MicroStrategy.
Saylor became the first CEO to hold bitcoin on the company's balance sheet. As the price of BTC rises, MicroStrategy's stock price rises with it. Saylor's approach has inspired other famous entrepreneurs like Elon Musk.
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Musk's Tesla bought Bitcoin, and a new wave of money and companies followed in Sailer's footsteps to allocate some of their assets to Bitcoin.
As of the last two halves, BTC price has fallen after reaching a new ATH.
Half cycle design
Across these half-cycles, a consistent pattern emerged. There appear to be five phases to Bitcoin's half-cycle.
A major bull run step correction during a significant rally consolidation period before a short correction declines.
ATAH occurred approximately 18 months later. This represents a simple yet accurate description of the previous three cycles.
PlanB, one of the most famous – yet controversial – analysts in the cryptocurrency space, summarizes a simple strategy for investors who are not inclined to participate in active business, which respects the theory of half cycles.
[Buy bitcoin 6 months before a halving and sell 18 months after a halving] Hit by history [buy&hold]. The next half is in April 2024… Will this strategy work again? pic.twitter.com/cbO80Ym7iC
— PlanB (@100trillionUSD) July 3, 2023
The strategy consists of buying BTC six months before the decrease and taking profits 18 months after the date of holding.
What to expect for the upcoming Bitcoin halving
As in the last half, there is a narrative that BTC price will go higher than the previous bull run and reach a new ATH. In this cycle, the accepted position of the Bitcoin ETF was the next phase that the market was waiting for.
The upcoming halving is less than 100 days away, and market watchers are optimistic about the possibility of a new Bitcoin ATH.
Basel Ismail, CEO of the investment analysis firm, told Cointelegraph that he believes the price of BTC will increase when the halving is reduced, but that the trading activity of the spot Bitcoin ETFs could affect the crypto market.
Ismail compared the operation of the gold ETF, launched in 2004, and its impact on gold prices. A pattern emerged where increases in gold prices were associated with net gold inflows and decreases with net outflows, indicating a feedback loop affecting cash transactions in the physical gold market.
In his opinion, the position Bitcoin ETF reflects the behavior of gold ETF as an accelerator of Bitcoin price movements. A large amount of flow should have a positive effect on BTC price, but this can be a double-edged sword.
Lead lag analysis indicates that inflows create price momentum and price changes affect flow, thereby highlighting both positive and negative market trends. When the gold ETF was launched, the price of gold fluctuated as shown in the following graph.
The arrows indicate a combination of variables (price action, volume action, several leading technical indicators action, and momentum action) that support how gold has been in a range-bound sideways accumulation zone.
Gold failed to rise above it for two-thirds of the year. As speed increases, the price will be pulled into the same price range. As the market heated up, the selling pressure outweighed the buying pressure.
For Ismail, this analysis provides insight into how a single Bitcoin ETF can affect the same Bitcoin market dynamics.
Ismail expects a pullback in the first month after the ETF approvals, noting that the market's expectations for BTC's price rise so quickly after the ETF's approval were too high. He said impatience in the market can quickly turn into a bearish trend and lead to a downward spiral.
Due to this slowdown in market activity, the crypto trader thinks that negative trends can lead to news cycles that drive the price of BTC down. The market then described it as a “acceptable response to Bitcoin ETFs.” For Ismail, a horizontal trend could be caused by two factors: weak and volatile market sentiment and the immediate impact of spot Bitcoin ETFs.
Bitcoin post-halve 2024 prediction
If the reduced supply of new BTC is not accompanied by significant demand, prices are unlikely to rise. The spot Bitcoin ETF has eclipsed all the media attention on the potential influx of money from traditional to crypto markets. But what about retail investors?
Ismail highlighted several signs that investor sentiment is improving, including increased web traffic to the Bitcoin Wikipedia page, increased Google search volume for several Web3 keywords, new X (formerly Twitter) followers to popular layer-1 blockchain and level-1 centralized cryptocurrency exchanges. (CEXs) and more.
Although he predicts some months of bearish pressure for BTC, he expects it to reach $100,000–150,000 by the end of 2025, when Bitcoin will break a new ATH after the decline.
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Before the approval of the spot Bitcoin ETF, many predictions were made. By the end of 2023, artificial intelligence applications have predicted an average ATH for BTC of $120,000. Others predicted still higher reviews.
Multinational Bank Standard Chartered Bitcoin It predicts it will reach $200,000 by the end of 2025, which will be pushed by ETF approval. Others, like Planby, predict that BTC will reach $532,000 following the half-cycle as shown in its stock-to-flow model. Cathy Wood, CEO and founder of ARK, predicts that Bitcoin will reach $1.5 million by 2030.
When it comes to the Bitcoin ETF, crypto investors have high morale and confidence in the price of BTC in the coming months, so patience may be required.
