As the Bitcoin (BTC-USD) halving event nears, investors closely monitor the supply-demand dynamics. Following Saturday’s sell-off, spot Bitcoin ETF net inflows on Monday were anticipated to shape demand post-halving. According to the Bitcoin Halving Countdown, the event is anticipated for Friday, April 19th, or Saturday, April 20, depending on how many blocks are pushed through in the coming days.

As the event approaches, both the Greed Index and Bitcoin Fear have come closer to the Extreme Greed division. On April 15, the index rose from 72 to 74, hinting at a potential BTC pullback. Market flow data from spot ETFs show net outflows of $82.8 million in the week ending April 12, which could influence near-term trends. Michael Saylor, founder and Chairman of MicroStrategy (NASDAQ:MSTR), shared a performance chart highlighting these trends on Sunday.

Here’s what investors may want to know heading into this pivotal halving event.

Turbulence Over the Weekend

On April 13, the cryptocurrency market experienced significant sell-offs following an unprecedented Iranian attack on Israel. Bitcoin, down by 8% late Saturday, rebounded from below $62,000 to above $64,000 by Sunday morning. That marked Bitcoin’s steepest decline in over a year, contrasting recent record highs driven by inflows into U.S. spot bitcoin ETFs.

Overnight in the Middle East, Iran launched its first direct attack on Israel, with Israel claiming to have neutralized 99% of the identified threats. The assault was allegedly prompted by an Israeli strike in Syria, resulting in a significant drop in Iranian currency.

On Sunday, Bitcoin rose by 1.74%, rebounding from Saturday’s 3.78% decline to close at $66,013, breaking a three-day losing streak. Investor sentiment improved following news that Iran had pre-warned Israel of the Saturday attack, easing concerns of immediate retaliation.

Pre-Halving Happenings

With the Bitcoin halving nearing, heightened demand from Ordinals traders raised transaction fees to 90 sats/vByte ($8.50 per transaction). Their increased activity, hitting over 162,000 transactions daily, spiked “daily inscription fee spent” to $1.24 million in 30 days.

James Van Stratten, a CryptoSlate analyst, noticed rising Bitcoin fees, possibly surpassing Ethereum’s (ETH-USD) due to the halving’s impact. Speculation suggests increased trading activity before the halving, reducing the new Bitcoin supply. Casey Rodamor’s launch of “Runes” may escalate fees further, sparking a memecoin trend on Bitcoin amid high L1 activity.

According to Coinglass data, nearly 300,000 traders faced liquidations in the last 48 hours, totaling about $936.12 million. With the Bitcoin halving imminent, the recent market dip aims to shake out weaker traders and attract those with stronger convictions.

Bitcoin’s current trend appears sideways, with resistance at $73,800 and support around $67,921, reflecting ongoing buyer pressure. As Bitcoin’s market cap hovers around $1.2 trillion and daily trading volume stands at $42 billion, a bounce from support could fuel momentum toward retesting the all-time high.

The Difference Between 2024 Halving and Previous Ones

Will the 2024 Bitcoin halving redefine crypto adoption? With Bitcoin ETFs emerging alongside the halving, the post-event market landscape may shift dramatically. This article explores the potential impact, from disrupting traditional narratives to shaping mainstream crypto adoption.

Previous Bitcoin halvings triggered significant price increases. In 2012, the reducing block was divided from 50 BTC to 25 BTC, leading the coin to surge 83 times. During the 2016 event, the surge was over 30 times, equating prices per BTC at $20,000. In 2020, it saw a steadier climb, with only 5 times increase and $60,000 per BTC.

Historical price trends suggest post-halving surges, but relying solely on them poses risks. The stock-to-flow model, correlating scarcity with price, has constraints. Previous halvings aligning with significant events like the 2012 European debt crisis show broader economic influences on Bitcoin interest.

The 2024 halving stands out with the advent of U.S. spot Bitcoin ETFs, altering investment patterns and market dynamics. The shift extends beyond miner reward reductions, signifying a pivotal change in Bitcoin’s landscape. The approval of these ETFs broadens investor access, fostering mainstream adoption and mitigating post-halving sell pressure with $12.1 billion inflows.

In the past, halvings brought sell pressure from reduced miner income, but Bitcoin ETFs aimed to offset this with fresh capital. ETFs’ influx might counteract post-halving sell pressure, echoing previous halving effects.

What to Expect Post-Halving

An analyst suggests that Bitcoin miners’ selling, totaling up to $5 billion, could persist for four to six months post-halving. Past cycles indicate a significant outflow of Bitcoin from miners during this period, potentially influencing Bitcoin’s sideways movement in the coming months.

Markus Thielen, a head of research analyst at 10x Research, expects big things after the halving event.

Thielen suggested a potential six-month “summer lull,” mirroring past patterns where Bitcoin traded between $9,000 and $11,500 post-halving. Based on historical trends, with this year’s halving around April 20, significant upward movement might only occur in October.

Additionally, miners tended to accumulate BTC, creating a supply-demand imbalance and driving Bitcoin prices higher before the halving. This trend was evident in 2024, with BTC soaring around 70% to a record high of $73,734 before correcting to below $63,000 in mid-April.

Thielen suggested that altcoins might be most affected, as many experienced significant declines recently, remaining far from their 2021 peaks. Despite predictions of an altcoin rally following the halving, historical data indicates that such rallies typically start about six months later.

Moreover, he suggested that Marathon (NASDAQ:MARA), the world’s largest Bitcoin miner, likely accumulated an inventory to be gradually sold post-halving to avoid revenue fluctuations. Marathon produces 28 to 30 BTC daily, which could mean an additional 133 days of supply, plus its post-halving production of 14 to 15 BTC daily. If other miners adopt similar strategies, up to $104 million worth of BTC could be sold daily, potentially reversing the supply-demand dynamics.

Marathon CEO Peter Thiel mentioned a break-even rate of $46,000 per BTC post-halving and expects minimal price shifts in the subsequent six months.

Bottom Line

In the cryptocurrency market, the Bitcoin halving event holds notable importance, occurring approximately every four years after every 210,000 blocks are mined. This event, reducing new coin circulation, helps regulate supply and demand by decreasing block rewards for miners. The halving instigates a demand-supply imbalance, potentially catalyzing a Bitcoin bull market.

The intertwining of ETF adoption and changing market dynamics sets a strong base for Bitcoin’s ongoing ascent. Beyond Bitcoin’s prominence, the event carries broader significance for the crypto realm. Investors must remain vigilant and adaptable amid the 2024 Bitcoin halving’s complexities.

Staying informed enables investors to seize emerging prospects and tackle potential hurdles effectively. To be sure, this will be an important event to watch, for those looking to trade Bitcoin in the coming months.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.