A $5 billion potential sell-off by BTC miners and the post-halving decline of Bitcoin Cash suggest caution ahead of Bitcoin’s fourth halving.
TakeAway Points
- The price decline of Bitcoin Cash following the halving and the decrease of futures interest indicate that Bitcoin’s impending halving should be approached cautiously, which could reduce expectations for an immediate bull run.
- According to JPMorgan, a post-halving sell-off in Bitcoin is expected to reach $42,000, indicating that the event may already be priced in.
- Bitcoin prices may be under pressure following the halving of miner sales, as a possible $5 billion BTC liquidation could have a months-long impact on market dynamics.
Bitcoin Cash Warns of Impending Bitcoin Halving
The drop in Bitcoin Cash following the halving and the potential $5 billion sell-off by BTC miners suggest caution ahead of Bitcoin’s fourth halving.
Bitcoin Cash (BCH) offers a warning as the cryptocurrency community awaits the fourth mining incentive halving, which has typically resulted in bull markets. After its own halving on April 4th, when it decreased the issuance of each block coin to 3.125 BCH, its price fell sharply from $715 to $604, a 15% decrease.
According to CoinGecko, this decline was accompanied by a 70% drop in notional open interest for BCH perpetual futures, which dropped to $376 million in less than a week. Major exchanges’ shift to negative annualised perpetual financing rates raises the possibility of market recalibrations following the halving and calls into question bullish holdings.
Volatility Rises as Halving Approaches
According to the report, Bitcoin’s volatility has suddenly exceeded that of Ether (ETH), with its 30-day historical volatility hitting around 60%, a remarkable divergence from its regular market behavior. This rise in volatility comes in the wake of the U.S. Securities and Exchange Commission‘s (SEC) approval of multiple spot bitcoin exchange-traded funds (ETFs), diverting trader focus and exacerbating bitcoin’s market fluctuations. This is the reason for the recent spike in volatility. Expected halving of the mining rewards to 3.125 BTC makes this volatility much more intense. The notion that Bitcoin stabilises cryptocurrency holdings is called into question by this.
Miners and Post-Halving Market Dynamics
According to 10X Research, miners may sell $5 billion worth of Bitcoin as a result of the upcoming halving, which will halve their payouts. This sell-off may stifle bullish momentum and cause a period of sluggish market action, similar to historical post-halving trends. The mystery surrounding Bitcoin is heightened by its pre-halves price climb to all-time highs around $73,000, while analysts such as Amberdata’s Greg Magadini have suggested a “sell-the-news” dip might occur after the halving. This scenario is supported by JPMorgan’s estimate of a post-halving sell-off to $42,000, which violates the conventional belief that halvings lead to market booms.
“Investment banking giant JPMorgan expects a sell-off to $42,000 once the halving hype subsides.” JPMorgan commented.
However, Markus Thielen, 10X Research, said, “Based on our calculations, miners will potentially liquidate $5 billion worth of BTC after the halving. The overhang from this sale could last four to six months, explaining why bitcoin might go sideways for the next few months, as it has done in the past.”
