After the massive run since October, Bitcoin has finally slowed down as the halving approaches just hours away. The extra demand from ETFs has slowed down, and overzealous optimism around massive rate cuts has disappeared. Moreover, the sharp sell-off during the Iranian attack once again showed that BTC is in the group of risky assets, not seen as a safe haven or digital gold.
On the upside, the argument for Bitcoin lies in the imminent halving, which is just hours away. Bitcoin mining will become significantly harder and costlier, leading to a reduction in supply. While this is true, the effects on supply should not immediately impact the price, other than the expectation of a price increase potentially bringing forward such effects. However, looking at the 2020 halving, BTC did not immediately enter a bull market; the first smaller increase took 11 weeks to begin, and the final run began almost half a year later to start. Thus, any immediate upward move might remain temporary if solely driven by the halving.
Bitcoin exhibits a high correlation with stock indices. Like BTC, stocks have enjoyed a robust run but are signaling a possible correction. Both the DAX and the S&P 500 index have broken their respective short-term trends, increasing the downside risk for BTC.
(BTCUSD Logarithmic Daily Chart)
Bitcoin has fallen more than 15% from its peak, suggesting that most of these negative effects may already be priced in. Since March, the movement has been relatively flat, hovering above the 59500 – 60750 zone, which is establishing massive support. However, the recent break of the 50-day moving average might intensify this pressure. If there’s a further decline, key supports to watch for are the Fibonacci 38.2% level at 55750 and the 200-day moving average, which supports the main uptrend. Should BTC drop sharply to around 52000, this could present a significant buying opportunity as long as the moving average holds.
Despite the negative pressure, the 59500-60750 zone is still holding. If it continues to hold, this negative scenario might be invalidated. Any upward movement will be significant if the price captures and holds above the 50-day moving average.
