Buzz in the cryptocurrency market has begun to build over the past week, with Bitcoin (BTC-USD) seeing a sharp 7% decline on April 13. After a strong start to the year, many investors expected this rally to continue indefinitely. However, an Iranian attack on Israel stopped the party, with geopolitical concerns being priced into a number of commodities and risk assets in recent days.
Let’s dive into whether this decline is something to be worried about, or if Bitcoin is still worth buying at current levels.
What Happened
As mentioned, the crypto market saw a sell-off on April 13 due to the Iranian-Israeli war, as U.S. officials confirmed the attack. Digital assets continue to react to escalating Middle East tensions, something I didn’t necessarily think would happen. After all, assets like Bitcoin are supposed to be hedges against uncertainty.
Bitcoin fell from $70,000 to below $62,000, rebounding to more than $64,000 by Sunday morning. Other tokens also saw considerable declines, with many seeing double-digit declines on the news. Notably, this drop was the largest Bitcoin has experienced since the launch of spot Bitcoin ETFs.
Bitcoin Halving Anticipated to be ‘Different’
Just a few years ago, cryptocurrency fans appreciated the Bitcoin Halving as it symbolized the token’s revolutionary nature. Now fully accepted by Wall Street and gaining plenty of traction from retail investors, the halving is greatly anticipated. Halvings happen every four years, and this halving (like all the others) will halve the supply of newly-minted Bitcoin from miners, enhancing its scarcity.
While historically signaling new cycles and bull runs, the 2024 halving differs as Bitcoin has already surpassed previous cycle highs, complicating its duration and intensity predictions.
Bitcoin’s past halvings have led to significant price surges, but future impacts may wane due to diminishing supply effects. However, a number of experts anticipate optimism for post-halving returns this year, with the current cycle potentially peaking in late-2025 or early-2026. Whether understanding Bitcoin’s deflationary nature or speculating on its price, the halving remains a significant event to monitor.
Don’t Fret, Bitcoin Remains a Buy
Mike Novogratz, CEO of Galaxy Digital, recently expressed his anticipation that a Bitcoin resurgence is on the horizon. While Novogratex expressed concern around the financial toll of wars, and the negative human impact, his bet is that de-escalation could lead to a resurgent Bitcoin price, as investors focus once again on fundamentals over the news flow. The importance of peace is his focal point, and it should be for all of us.
I tend to agree with Novogratz, and take the view that Bitcoin’s dominance in the crypto world will remain for some time. The company’s status as a currency alternative does provide some stability over time, and as inflation continues to make headlines, Bitcoin’s relative stability and lower inflation rate should boost its valuation (at least in theory).
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.
