Coinbase Cautions About Difficulties for Bitcoin Halving During ‘Seasonally Low Period’

Coinbase has cautioned that the current season may present difficulties for upward momentum as traders anticipate a price increase ahead of the Bitcoin (BTC) halving.

In its market commentary report published on April 5, Coinbase underscored the necessity for the crypto market to discover alternative narratives to drive prices upward.

The Bitcoin halving, set to occur around April 20 or 21, is frequently viewed as a trigger for price hikes.

Nonetheless, Coinbase points out the historical frailty of crypto markets and other risk assets during this period of the year.

Data from digital assets research firm Brave New Coin indicates that, since 2011, Bitcoin has recorded average monthly returns of roughly 2.7% from June to September.

In comparison, the other eight months have yielded an average return of about 19.3%.

Crypto Volumes Continue to Decline

Coinbase also observed that crypto volumes have been decreasing as the market seeks the next catalyst.

In the last 24 hours, total crypto volume reached $61.78 billion, marking a notable 33.25% drop from the previous day, according to CoinMarketCap data.

Despite these obstacles, Coinbase recognized potential indicators suggesting an influx of new investors into the crypto market.

The exchange proposed that Bitcoin’s increasing recognition as a form of “digital gold” could draw in a new group of investors.

At present, Bitcoin’s dominance in the overall crypto market is at 50.6%.

Additionally, Coinbase anticipates that price dips may be more aggressively purchased compared to earlier cycles, even as volatility remains during price discovery.

As more investors enter the market, the depths of price declines could become less severe.

Halving events have traditionally been linked with increases in Bitcoin’s price.

Following the last halving event in May 2020, Bitcoin underwent a significant rally.

Beginning at $8,787 during the halving, the cryptocurrency surged to nearly $69,000 by November 2021.

Bitcoin ETF Flows Expected to Stay Strong

In a recent analysis, on-chain analytics firm Santiment indicated that spot Bitcoin exchange-traded fund (ETF) flows are expected to remain strong as the Bitcoin halving approaches.

The firm noted that Bitcoin ETF volume has not diminished since the asset’s mid-March all-time high.

Santiment mentioned that trader activity continues to exceed the turning point in late February when individual trading surged.

“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

Santiment reported that the top seven ETFs have recorded a daily volume of $3.19 billion.

However, the firm expressed interest in seeing whether there would 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, anticipates Bitcoin will reach $75,000 by the time of the halving event.

“Historically, BTC halving events have marked significant points followed by 9-18 months of uptrend, culminating in cycle peaks,” he noted in a recent report.

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