The strange growth cycle and 'unusual' things of Bitcoin before the Halving event

Over the past week, the cryptocurrency market has had unusual adjustments and fluctuations, leaving many investors unable to react in time. However, after the price of Bitcoin once fell below the $65,000 mark, there were signs of recovery appearing. At the end of the trading week, the price of the market's largest cryptocurrency dropped about 2% and stopped above the 69,000 USD mark. Although the market has not yet been able to recover above the $70,000 mark, it is still the second consecutive week that the market closed the week above the $69,000 threshold - an important milestone for Bitcoin at the present time.

According to observers, the reason for the unusual decline in the cryptocurrency market over the past week came from the strong selling force of the Grayscale Bitcoin Trust (GBTC) fund and a number of hedge funds that have placed large bets on the cryptocurrency. Bitcoin short position. Newly published data from analytics company Arkham Intelligence shows that GBTC's selling force in recent times has been driven by the bankrupt company Genesis.

Specifically, Genesis is a company operating in the lending industry and like Grayscale investment fund, they are all subsidiaries of Digital Currency Group. After the crisis and scandal in 2022, Genesis had to declare bankruptcy in January 2023. The court approved the proposal to convert Genesis' GBTC shares to Bitcoin or cash, with the aim of compensating damaged customers.

According to the report, the process of liquidating all GBTC shares held by Genesis was completed on April 2 and was used to buy back 32,041 Bitcoin, worth $2.2 billion. A representative of Genesis said it will use the proceeds to fully compensate users participating in the Earn savings program of the Gemini digital currency exchange.

However, at the present time, the event that is gaining the most attention from investors is the Bitcoin Halving (halving event) which will take place in about 2 weeks on April 20.

In the history of the 3 previous halving events, the market has had strong fluctuations, with an average fluctuation of about 30 - 40% before being able to set a new historical peak. , within approximately 480 days from the date of the Halving event. That is according to what has been recorded, but in this "different" growth cycle, the participation of spot Bitcoin ETFs has changed all "traditions".

It is not difficult to see that, in this growth cycle, the volatility of Bitcoin is much lower than before, barely exceeding 25%. At the most recent adjustment, Bitcoin price only fluctuated about 15% before recovering back above the $70,000 mark. There are many opinions that the market may witness another correction before this year's Halving event occurs to clear the way for the "king" of cryptocurrency to set a new historic peak. In the current context, it is difficult for unusual fluctuations to occur as in history.

Mr. Lucas Kiely, Investment Director of Yield App, said that there are two factors that have changed "history".

First, the proportion of Bitcoin held by long-term investors has reached a record level of about 14 million Bitcoin, accounting for more than 70% of the current total supply. Not only that, in recent months, the number of Bitcoins withdrawn from exchanges to transfer to cold wallets has also set new records. This is a sign of commitment to accompanying the market for a long time, also known as diamond hands.

In addition, the most important difference comes from the participation of newly approved Bitcoin spot ETFs in the US. At the current rate, these ETFs are scooping up more Bitcoin than miners can supply. By the end of the first quarter of 2024, ETF funds had collected about 220,000 Bitcoin, approximately 4% of the total market supply, with an amount of about 14.2 billion USD. On average, ETFs collect nearly 10,000 Bitcoins per day, while miners can only provide about 900 Bitcoins. This influx of money not only pushed Bitcoin to new all-time highs, but also fueled greater demand for crypto assets.