The Bitcoin halving, an event that takes place once every four years and cuts the reward for mining Bitcoin transactions in half, could also pave the path for a new bull run.
With the exception of a few isolated events that have attracted the interest of crypto enthusiasts to a certain degree, the crypto space has been uncharacteristically quiet these past few months. Over the years, we’ve become accustomed to and have come to expect constant turmoil in the crypto market, with sudden upticks in the Bitcoin and Ethereum prices, precipitous declines, highly-anticipated upgrades, scandals, and all sorts of dramatic events that have earned the cryptocurrency industry the Wild West moniker.
And yet, this usually turbulent asset class has been anything but wild lately. Analysts are constantly looking for trends, patterns, and changes that could indicate the approach of a bull or bear market, but so far, no such signs have appeared on their radar, meaning that the outlook is neither positive nor negative.
Looking at the charts, Bitcoin seems to be in a state of equilibrium at the moment, occupying the middle ground between slight rises and declines and refusing to sustain a clear direction. With the flagship crypto setting the tone for the entire market, the rest of the coins appear to experience a similar stagnation that doesn’t leave room for much interpretation.
Could this period of calmness be a sign that the market is finally maturing and the long-awaited stability could become a state of normalcy for crypto, or is this just the calm before the storm? Knowing the unpredictable nature of crypto assets, we can’t have any certainties in this respect. The balance can tilt in any direction at any time, shattering any predictions and expectations that traders and investors might have.
Feeble Price Movements across the Board
The king of crypto started the year with a bang, gaining as much as 83% and reaching a high of $31,035 at one point. However, Bitcoin’s recent performance hasn’t been nearly as exciting, at least judging by the price movements of the past few weeks.
The asset has experienced several spikes but failed to sustain the bullish momentum on all occasions, encountering a resistance point at $28K. Each attempt to break above this threshold was met with an immediate bullish resistance. After falling 3% in the first week of October, Bitcoin has remained in the $2,600 – $2,700 range, with no indications that it could move beyond these values in the near future. At the time of writing, Bitcoin was trading at $ 26,669.
Ethereum, the second-largest crypto by market cap, seems to be in a similar situation. The coin had a good run during the first few months of 2023 and managed to partially recover after the massive losses caused by the latest crypto winter. However, its appreciation rally didn’t last long enough for the asset to reach its previous highs. Ethereum tried to push beyond the $2K mark two times, but price corrections prevented it from going further. The asset registered a 5% loss this past week, with its current price standing at $1,547.
Looking beyond the two most prominent assets in the market, we can see that other major coins are also hanging in limbo. XRP and SOL have each registered an 8% decline, while BNB and DOGE, the most famous meme coin lost only 3% before stabilizing.
One could argue that Bitcoin and Ethereum haven’t been completely still, showing that there is potential for future gains. However, none of them has been able to capitalize on their short-lived upswings and turn them into bull runs. All in all, the price action has been almost negligible, so there’s not much to read in the back-and-forth movements we’ve seen so far.
What Could Pull Digital Assets Out of Their Slumber?
As analysts point out, this phase of quietness and tranquillity is not going to last forever. Even if the market becomes a bit more stable, with fewer or less dramatic price swings to scare traders and investors away, digital currencies remain a young and still developing asset class, and that makes them inherently volatile.
But it’s just as true that cryptocurrencies don’t move on their own. They need an internal or external factor or some sort of triggering event to push them in one direction or another and steer their trajectory.
In the past, crypto prices have been influenced by a combination of socio-economic and political developments that have created many boom-and-bust cycles. This time, spot Bitcoin ETFs or the incoming halving event could serve as catalysts for more notable developments in the market.
A few months ago, asset management giant BlackRock caused huge waves in the market when it announced it had filed an application with the US Securities and Exchange Commission for a spot Bitcoin exchange-traded fund (ETF). Even though the SEC has been adamant in denying all proposed bitcoin ETFs due to concerns related to fraud and market manipulation, crypto enthusiasts hold out hope that the recent applications stand better chances of approval. A favorable ruling can be a huge step forward for Bitcoin and the crypto industry as a whole as it would encourage greater institutional demand and adoption of digital assets and bring them closer to mainstream acceptance.
The Bitcoin halving, an event that takes place once every four years and cuts the reward for mining Bitcoin transactions in half, could also pave the path for a new bull run. Historical data shows there’s a connection between halving events and Bitcoin appreciation trends. With the next having expected to happen around April 2024, there’s a realistic possibility for market sentiment to shift as we approach the date.
Not much has happened in the crypto sphere these past weeks, with prices hovering around the same values and no notable changes on the horizon. However, one should not forget that there are many developments to be expected in the near future that could change the climate in the crypto market and trade this period of calmness for a new stage of progress and transformative events.