Coinbase has issued a warning regarding potential challenges to upward momentum as traders anticipate a price surge preceding the Bitcoin (BTC) halving.
Released on April 5, Coinbase’s market commentary report stresses the importance of the cryptocurrency market finding alternative narratives to drive prices higher.
The Bitcoin halving, expected around April 20 or 21, has historically been viewed as a catalyst for price increases. However, Coinbase points out the historical weakness observed in crypto markets and other risk assets during this particular time of year.
According to data from digital assets research firm Brave New Coin, Bitcoin has historically delivered average monthly returns of approximately 2.7% from June to September since 2011. In contrast, the remaining eight months have yielded an average return of around 19.3%.
The volume of cryptocurrency trading continues its downward trend.
Coinbase’s observations indicate a notable slowdown in cryptocurrency trading volumes as the market endeavors to identify its next catalyst. According to CoinMarketCap data, over the past 24 hours, the total crypto volume amounted to $61.78 billion, marking a substantial 33.25% decrease from the preceding day.
Despite the prevailing challenges, Coinbase discerns potential indicators signaling an influx of new participants entering the cryptocurrency arena. The exchange particularly highlights Bitcoin’s evolving recognition as a digital equivalent to gold, a narrative that could allure a fresh wave of investors. Presently, Bitcoin commands a dominant position in the overall crypto market, with its market share standing at 50.6%.
Furthermore, Coinbase anticipates that instances of price downturns may witness more assertive buying activity compared to previous market cycles. This trend could persist amidst ongoing volatility as market participants engage in price discovery. With the influx of new investors, the depths of price declines could potentially become less pronounced over time.
Historically, halving events have been accompanied by significant upticks in Bitcoin’s price. Following the previous halving event in May 2020, Bitcoin embarked on a remarkable rally. Commencing at $8,787 during the halving, the cryptocurrency surged to nearly $69,000 by November 2021, underscoring the potential impact of such events on Bitcoin’s value trajectory.
Anticipations suggest continued robust flows into Bitcoin exchange-traded funds (ETFs).
In a comprehensive analysis, on-chain analytics firm Santiment has indicated that the flow of spot Bitcoin exchange-traded funds (ETFs) is expected to maintain its strength in the period leading up to the Bitcoin halving.
The firm highlighted that the volume of Bitcoin ETFs has shown no signs of deceleration following the asset’s all-time high in mid-March. Despite market fluctuations, Santiment underlined that trader engagement remains notably elevated compared to the inflection point observed in late February, which saw a surge in individual trading activity.
“It is a likely foregone conclusion that high activity should continue leading up to the April 19th halving, but it will be interesting to see whether a drop-off in ETF volume and on-chain volume will occur directly afterwards.”
📊 #Bitcoin #ETF volume hasn't slowed down four weeks after the $BTC #AllTimeHigh. Among $GBTC, $IBIT, $FBTC, $ARKB, $BTCO, $BITB, and $HODL, trader activity is still notably higher than the turning point that began in late February after an influx of individual trading began… pic.twitter.com/LErr5T8BWF
— Santiment (@santimentfeed) April 7, 2024
According to Santiment’s findings, the leading seven ETFs have collectively recorded a daily volume of $3.19 billion.
Nonetheless, the firm is keen on monitoring whether there will be a reduction in ETF volume and on-chain volume immediately following the halving event.
Meanwhile, Matteo Greco, a research analyst at digital asset firm Fineqia International, holds an optimistic outlook on Bitcoin’s trajectory, forecasting a price target of $75,000 by the time of the halving event.
“In historical context, BTC halving events have marked significant milestones, often followed by 9-18 months of upward trends, ultimately culminating in cycle peaks,” Greco emphasized in a recent research note.
Read more about: The Potential Impact of Coinbase’s Legal Hurdles on the Cryptocurrency Sector
