Bitcoin remains under pressure when writing and is within a bearish formation following sharp losses on March 19. While prices tank, one analyst on X thinks this retracement aligns with historical performance, especially as the network prepares to slash miner rewards in April 2024.
Bitcoin Retracement Similar To Pre-Halving Cool-Off Of 2020
Based on the analyst’s assessment, BTC is currently down roughly 18% from its recent swing high. This retracement is at the same level as the ballpark 19% decline observed before the previous halving event in 2020.
It’s worth noting that Bitcoin has historically corrected lower after posting fresh highs before halving. Afterward, the coin rallies to fresh all-time highs following halving, driven by a decrease in supply. In this cycle, BTC soared to a new all-time high of $73,800 in the first two weeks of March before cooling off to spot rate, a deviation from the usual trend.
As the Bitcoin network gears up for the halving event in mid-April 2024, it’s crucial to note the potential market implications. Some market observers speculate that the current drop could offer entries for investors looking to accumulate at a lower price in anticipation of future price gains.
From the Bitcoin candlestick arrangement in the daily chart, the least resistance path appears southwards. Specifically, following the dip on March 19, the coin remains in a bearish breakout pattern, finding strong rejections from the middle Bollinger Band (BB) or the 20-day moving average. The BB is a technical indicator for gauging volatility.
Will The Federal Reserve Revive BTC Demand?
Currently, Bitcoin is steady. Even so, only time will tell whether prices will recover, breaking above the $70,000 level in the days leading up to the halving event in less than a month. Further losses from spot rates mean the dip before halving and after the pre-halving rally was much sharper than in 2020.
As history clearly shows, halving is an important event in Bitcoin. It has repeatedly proven to be a major price catalyst for Bitcoin, as seen in the last bull cycle when prices rose to roughly $70,000.
Accordingly, the coming days will shape how Bitcoin prices evolve in the medium to long term. One key driver of crypto and BTC valuation will be fundamental events, especially pronouncements from the United States Federal Reserve (Fed). The central bank will relay its decision on interest rates on March 20. Earlier in 2022, when interest rates were hiked, prices tanked.
Feature image from DALLE, chart from TradingView
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