“we expect higher volatility during the bitcoin halving”

Bitcoin has swayed this week and is still trading far from its absolute record reached in mid-March, above $73,000.

Bitcoin has been on a roller coaster ride this week. The queen of cryptocurrencies plunged towards $60,000 on Wednesday, its lowest threshold in three weeks. At 9:45 a.m. this Friday morning, bitcoin rose again, trading above $66,000. It nevertheless remains 10% lower than its absolute record reached on March 14 at $73,750 according to data from Coinmarketcap.

The volatility of bitcoin can be explained, in part, by record outflows on spot bitcoin ETFs in the United States. On Tuesday March 19, the funds saw $326.2 million in outflows, a record since their launch. Likewise, the Grayscale ETF (GBTC) faced 300 million outflows… just on March 20.

On January 10, the American stock market watchdog (the SEC) has authorized 11 spot bitcoin ETFs, offered in particular by asset managers like Blackrock and Fidelity. An ETF (or Exchange Traded Funds) is an index fund trading on a stock exchange which follows the evolution of a stock index (or one or more financial or physical assets, such as gold) by replicating the increase as well as the drop in the price of this index (or these assets).

“The decline in bitcoin remains in line with our estimate of 10 to 20%, as has already been historically observed just before the halving. We expect higher volatility during this event,” said Semir Gabeljic of Pythagoras Investments at Coindesk.

The next bitcoin halving will take place around April 19, 2024 and this event risks having an impact on the price of the queen of cryptocurrencies (see our FULL UNDERSTAND on this subject).

The volatility of bitcoin should not make us forget its surge in 2024. Bitcoin has increased 60% since the beginning of January, including 30% in the past month. Such a rapid rise in assets can also turn into an equally impressive decline. Investors should remain cautious and should only invest in bitcoin what they are willing to lose.