(Kitco News) – Bitcoin (BTC) and the broader crypto market showed signs of recovery on Thursday as traders increased their exposure ahead of the halving, which is predicted to occur sometime between Friday and Saturday.
While the halving is considered a major event in the cryptocurrency market cycle, many crypto enthusiasts will be happy once it has passed as the volatility that occurs around the halving can be challenging, especially for those who try to day trade the market.
Data provided by TradingView shows that after hitting a weekly low of $59,670 on Wednesday afternoon, Bitcoin has clawed its way back above $64,000, with bulls briefly pushing it to $64,220 as midday approached and now looking to extend the gains into the afternoon.
BTC/USD Chart by TradingView
At the time of writing, BTC trades at $63,685, an increase of 5.6% on the 24-hour chart.
“Bitcoin has historically had a choppy period of price action prior to the halving,” said Rennick Palley, founding partner at Stratos, in a note to Kitco Crypto. “This year is unique in that a prior all-time high was breached ahead of the halving, which has not occurred before.”
Palley said there are currently two main headwinds for Bitcoin: “the volatile pre-halving period as well as prior time highs, which typically take 2 to 3 attempts to definitively breach.”
Stratos expects Bitcoin to break through the previous high “by mid-summer and continue towards 150k plus by 2025,” he said.
In the short term, Palley said the focus on inflation and interest rates is putting pressure on Bitcoin, but over the longer term, he sees people opting to invest in Bitcoin as a way of preserving their purchasing power as central banks continue on their debt binge.
“Equities markets in addition to crypto are selling off due to fears of stubborn inflation and fewer rate reductions this year,” Palley said. “While Bitcoin tends to trade with risk assets in the short term, higher inflation for longer is a position for Bitcoin due to this hard money principle relative to continued money printing from the Fed and other central banks around the world.”
Greg Magadini, Director of Derivatives at Amberdata, also sees macroeconomic factors influencing the markets, which he sees as a good thing in certain regards as it has helped clear out some of the excess speculation.
“The global macro is really driving the market right now, it’s not just crypto that’s going down, everything is dumping,” Magadini said in a note to Kitco Crypto. “We’re seeing higher rates for longer. The probability of a rate cut for June went from 71% last week to 50% this week, to now 25%.”
“This brings a nice amount of leverage out of the market, which is actually constructive going forward, allowing markets to re-establish fresh long exposure when ready,” he said. “Some may think the crypto fundamentals are worse but actually the fundamental picture has only become stronger, not weaker.”
Magadini noted that conflict “has historically been bullish for BTC (October 2023, Ukraine/Russia war, etc),” and said that “CPI and inflation appearing sticker than expected [is] making BTC an even more attractive fiat alternative.”
He suggested that conditions in the crypto market will start to improve following the halving, and pointed to “ETF demand,” including the recent approval of spot BTC and Ether ETFs in Hong Kong, as factors that point to a positive future for crypto prices.
According to Finder’s latest Bitcoin price predictions report, a panel of 31 crypto and fintech specialists predicted “Bitcoin will peak at $122k in 2024, before ending the year at $109k.”
“Analysis of historical price trends, market sentiment, adoption rates, and macroeconomic factors such as inflation and geopolitical events informed the Bitcoin price predictions,” said Sathvik Vishwanath, Founder of Unocoin Technologies. “BTC’s current price is seen as underpriced due to its growing adoption as a hedge against inflation and increasing institutional interest. These factors suggest a bullish trajectory for Bitcoin’s value, supported by its limited supply and growing demand from both retail and institutional investors.”
“The halving event, [along with] the purchase of Bitcoin by EFT managers, will cause increased scarcity in the marketplace,” said Andy LaPointe, crypto product manager at CryptoWisdom.com. “In addition, institutional investors and investment advisors now have a regulated Bitcoin product they can allocate into model portfolios. Also, as more businesses and governments across the globe recognize Bitcoin as a payment option or investment, global demand will continue to place buying pressure on Bitcoin.”
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