Bitcoin, VOC, Voice Of Crypto
As the halving approaches, miners have powered up their rigs on full throttle, mining every Bitcoin block before the halving reduces block rewards from 6.25 BTC to 3.125 BTC.
Data from Blockchain.com shows that the total hash rate has reached $629 million Tera Hashes per second (TH/s). A week ago this figure was near 598 TH/s. The 5% rise within a week points towards the aim of miners to mine every possible block that can give them 6.25 BTC per block.
The Bitcoin Halving Event counter at Voice of Crypto shows that there is approximately 9 days remaining for the halving event. The block height during press time was 838,881 blocks with the event scheduled at a block height of 840,000 blocks. The halving takes place every 210,000 blocks.
At the halving event, the block difficulty will increase to the extent that the miners would only be able to generate a block if they dedicate twice the amount of computational power they dedicate now. This is the reason why Bitcoin miners are trying to extract as much Bitcoin as possible.
During the previous halvings, Santiment has observed that in the previous halvings, the market activity usually rises around the event. However, in the 2024 Bitcoin Halving, the market activity has neither increased nor decreased. It has remained consistent in the last few weeks.
Santiment uses an indicator called the Mean Dollar Invested Age(MDIA) to decode the market activity of Bitcoin traders and investors at any given point in time. The indicator tracks the average amount of time an investment (into Bitcoin) has been made. The data considers individual wallets as units for the measurements.
A falling line in the MDIA graph against time shows that there is an increased market activity as invested age shrinks due to frequent trades. Similarly, an increasing MDIA graph shows that Bitcoins are spending more time in the user's wallets.
For other cryptocurrencies, the MDIA has been increasing which means recently, there has been less trading and investing in those markets.
Something peculiar has been observed in the past few days. The MDIA line in the last few days() has stagnated, which means market participants have neither increased nor decreased their activity. This shows that as Bitcoin approaches the halving, traders and investors have been making very calculated moves.
Such activity was also observed in late 2023 (Oct-Dec) when despite several rumors of delay and rejection of Bitcoin ETFs arose, the markets stayed firm.
Top Bitcoin Analyst Markus Thielen and 10x Research have brought out a report on Bitcoin miners, that shows that, once the Bitcoin Halving is over, miners are ready to sell $5 billion worth of Bitcoins. According to the analyst, this selloff could keep Bitcoin under pressure for the next six months.
In a previous article, we showed how Bitcoin miners were trying to extract every Bitcoin before the fourth halving event on 19th April. The event will reduce new miner rewards and hence the Bitcoin supply by half.
The fourth Bitcoin halving which is expected to occur on the 19th of April, 2024 will reduce the Bitcoin mining rewards from 6.25 BTC per block to 3.125 BTC per block. The event would reduce the supply of new bitcoins from 900 per day to 450 per day. This means the miners will have to make the same effort to mine half the number of coins.
Lately, miners have been trying to push their mining rigs to their limits in an attempt to mine every Bitcoin before the halving event strikes.
Bitcoin Hash Rate
NiceHash
Also, after the halving event, these miners would have to sell their Bitcoin holdings to cover their expenses since it would take some time for the miners to adjust to the new mining rate.
The report by 10x Research shows that miners have approximately $5 billion worth of unsold Bitcoins in their inventory. If these Bitcoins are sold in the open market, they may keep the price of Bitcoin under pressure for several months.
The situation is further aggravated by the fact that the US Federal Reserve has been reluctant to cut interest rates in mid-2024. This news alone caused Bitcoin to fall about 10% in a single day.
Further, the US Government has been trying to sell $2 billion worth of Bitcoins that was recovered from various seizures done by various US Authorities. All of these factors seem to worsen the situation.
Though Bitcoin seems to be under pressure, not everything has turned sour in the market.
There is also a factor working in the positive direction. Spot Bitcoin ETFs continue to buy Bitcoins. This buying has been the core of the rally in Bitcoin in the last six months.
As of today, 14th April, at press time, Bitcoin has found support at $61k and is stable at $65k.
Bitcoin’s drop to $61,000 has left the market in tatters. This move has liquidated leveraged positions with a nominal value of $5.2 billion. The deepest of all liquidations took place in futures markets.
This sudden downturn adds to fears of a miner-led sell-off that had been predicted just moments earlier. Bitcoin is about to undergo its halving event in a few hours. A market-wide selloff is expected as Bitcoin miners prepare to sell their stash to cover costs.
The pain of the halving event will strongly be felt this time as the ETF inflows have also turned negative.
In April 2024, the Bitcoin leveraged positions have been liquidated to the tune of $5 billion and more. The unexpected falls in the spot price have been causing huge impacts in the derivatives markets.
A drop in the value of total futures contract value from $35 billion on April 1 to $29.4 billion on April 18 was also noted. The largest fall in marketwide positions came on 13th April when the market cap fell from $33.23 billion to $29.8 billion within a single day. Bitcoin’s price fell from $67.1k to $63k within the same period.
The funding rate has also dropped from being super bullish with 0.1% on April 1st to a neutral value of -0.0053% on April 18th.
The funding rate is the difference between the futures contract price and the spot Bitcoin price. A positive funding rate means Bitcoin buyers are super bullish and expect higher prices. Similarly, a negative funding rate denotes a bearish expectation of price.
There have been additional fears of a Bitcoin crash due to miner-led selloffs. As the halving event passes, miners would struggle to meet their mining costs and might be forced to sell Bitcoins from their stash.
The amount of Bitcoins with miners is estimated to be around $5 billion. Though this volume seems less as compared to Bitcoin’s daily trading volume, it is considerably high considering the sentiment in the market. The miner-led selloff does not seem to be huge but it can surely trigger a selloff in the markets.
Added to other woes, this would ultimately put pressure on current markets which already seem fragile.
For a few days, Bitcoin ETFs have also been witnessing a negative inflow which shows that the people are pulling out their money from the spot ETFs.
Data from The Block shows a gradual decrease in the ETF inflows and an increase in outflows shown in the light-green color.
Negative inflow forces the ETF crypto custodians to sell their Bitcoins which could also trigger a selloff along with the miners.
Bitcoin daily charts also show that a sell-off in Bitcoin might be inevitable after the halving event.
RSI has already plummeted to a lower range of 40 which shows that there is a weakness in the price momentum.
Further, Bitcoin is about to break strong support in the zone of $61k-$60k. If this support is broken, daily price charts indicate that a price of $50k might be inevitable.
All of these, put together, paint a grim picture of Bitcoin’s price in the coming week.
The Bitcoin Halving is finally over at a block height of 840,000 and at 12:09 am UTC on April 20th, 2024. The moment saw a huge number of people try to get their transactions included on the 840,000th block to mark the moment. Block rewards are now at 3.125 Bitcoins. However, there is also an increase in the price of Bitcoin, meaning, though block rewards are getting lower, the amount in dollar terms has increased from $53,860 (6.25 BTC) to $200,229 (3.125 BTC).
The next and the fifth Bitcoin halving is estimated to be scheduled between February 4th, 2028 to April 17th 2028 at a block height of 1,050,000. This halving would serve to reduce the block reward from 3.125 Bitcoins to 1.5625 Bitcoins. However, with an expected increase in Bitcoin’s price, we expect that each block reward would be worth over a million dollars by them.
