Bitcoin has made enormous strides since its release in 2009 and has seen three halves in the trading market in the last one and a half decades. With its fourth halving coming near, price fluctuations are a hot topic in the crypto trading industry. The volatility of BTC is in question, even though it hasn’t been a week since Bitcoin’s ATH. With a fresh all-time peak of almost $73,798, the largest cryptocurrency is coming close to a major ‘red alert’ as the price drops to 62,974.30 USD, a decrease in value of 6.86%. However, it is not an unknown nature, as it has historically been significant in its pre-halving days. According to Rekt Capital, Bitcoin experienced a 40% retrace in 2016, followed by a 20% retrace in 2020.
As block rewards are set to be lowered by half, bitcoin miners’ urge to mint the currency will suffer, making bitcoin scarce. Reduced supply growth will lower inflation, and the network will eventually approach maximum supply. Miners will not receive block rewards in newly generated Bitcoins; therefore, transaction fees will be the mainstay for miners. In the past, this artificial scarcity has resulted in a price increase in the months following the halving, which has often helped miners recover any losses incurred due to the halving. However, the fourth halving, set to happen in the middle of April 2024, may be detrimental to Bitcoin’s future because miners may leave the network as rewards are halved and new global laws are in the works.
It is critical to examine the elements influencing Bitcoin’s market price. With the recent announcement of the United States Federal Budget for 2024, miners will be compelled to pay taxes on their energy consumption if appropriation measures are approved and made into law. Miners may find it difficult to mine bitcoins when the base payout is low. Furthermore, taxes would be levied on each Bitcoin liquidation.
At the same time, Bitcoin has recently shown an increase in liquidity over the last week, and analysts are wondering whether traders will encash now or if market makers will push the price down first to allow more liquidity to grow on top and then cash out. Considering all the variables and utilizing AI analysis metrics, the Bitcoin market will supposedly stand at $68,705 by March 31, indicating a minor, modest uptick of 1.07% from its present value.
Source: https://www.cryptonewsz.com/is-btc-in-red-alert-as-halving-event-nears-an-analysts-take/