ETFs Are Yesterday’s News… The Halving Is Upon Us!

Bitcoin Bulls Win the $40K Battle. Is $45K Next?

Things are moving fast in the world these days and even faster in the crypto trading world. People are eager to jump on the next piece of news and the next potential market mover. But it’s a world where the anticipation, the rumor, almost has a bigger impact than the happening itself.

As we just saw with Bitcoin Exchange Traded Funds (ETF), the crypto world was buzzing at every hint that the U.S. Securities and Exchange Commission was throwing out there. And with every hint, the “digital gold” would push higher. However, as soon as the ETF approval was announced, Bitcoin took a dive. That dive didn’t come as a surprise and was (probably still is) a good opportunity for big players to accumulate BTC at a discount.

As the ETF craze is toning down, a new potential “buy the rumor, sell the news” opportunity arises:  The Halving. This event happens roughly every 4 years and it means that the block rewards are being cut in half. The initial block reward was 50 BTC, at the moment it’s 6.25 BTC and on the 10th of April it will become 3.125 BTC. The halving is embedded into Bitcoin’s code, so there’s no doubt that it will happen.

We could look at the halving as a pay cut for miners (they will receive less BTC for mining a block). Not only that, but it also reduces the speed at which new coins are mined. This means that supply will be decreased and when supply goes down, usually price goes up.

Previous Behavior Before Halving

Keep in mind that the halving doesn’t affect the existing supply, it only decreases the rate of the creation of new coins. Looking at past performance, Bitcoin rose from $392 to $604 in July 2016 (before the second halving) and jumped from $7,194 to $9,080 before the May 2020 halving.

Should we expect a similar behavior to precede the April 2024 halving? And if the answer is yes, what will happen after the event takes place? Will it be another case of “buy the rumor, sell the news?

Chart Analysis – BTC/USD

Although Bitcoin dipped below $40,000 support, reaching a low of $38,505, it quickly recovered and is now struggling to return above the 50-day Moving Average. There’s a cluster of small daily candles at this zone, which is a behavior that usually precedes a stronger move.

The RSI is hovering in the middle of its range but it has a bullish bias. Overall, it doesn’t show divergence and it doesn’t offer strong clues. It looks like we are dealing with a bounce-or-break scenario and the main actor is the 50 MA. A potential break will open the door for $45,000 but a bounce will probably take the pair back toward $40,000