The Upcoming Halving Differs From Previous Ones
In anticipation of Bitcoin's imminent halving, analytics firm Glassnode has released a report analyzing the upcoming event and how it affects trading strategies
The main message of this report was that the upcoming halving is significantly different from previous ones, and investors should rethink bullish sentiment markers and look at their trading strategies differently.
Historically, halving has reduced the rate of new Bitcoin generation by half, thereby creating a form of digital scarcity. This event led to less selling pressure from miners, helping to create a positive space for prices to rise.
However, Glassnode assures, the 2024 halving is moving away from this model, as a new player in the form of ETFs is now becoming a key aspect in shaping the Bitcoin supply and demand equation. The report argues that Bitcoin ETFs trading can markedly counterbalance the scarcity effect caused by halving:
"This dynamic introduces a need for traders to balance the historical impact of halvings with the contemporary influence of ETFs on bitcoin’s availability and price."
ETFs will also reduce the impact of long-term price movements, with other key market forces coming to the fore during this period. In addition, analysts warned of a possible correction ahead of the halving:
"As we approach the next halving, the market structure suggests that we could witness another significant correction."
If ETF flows begin to slow before the halving, this could have a strong impact on the market. This factor, combined with the market's pre-halving expectations, could trigger a period of heightened volatility, with traders likely to adjust their positions in response to the first signs of a shift.
Interestingly, analysts at Glassnode view the halving as a “news sell-off” because historically the market has experienced increased volatility immediately following this event, so investors are advised to be cautious and careful with their trading strategies.
