Bitcoin (BTC) Price Consolidation Continues Post-Halving: Insights from Bitfinex

• Bitcoin’s price consolidation may continue for up to two months post-halving, according to analysts at cryptocurrency exchange Bitfinex.
• Despite current on-chain signals indicating a potential bottom for Bitcoin, the cryptocurrency’s dominance is experiencing a decline, with Ethereum and other altcoins outperforming it.
• Investors are shifting focus to altcoins in search of potentially higher returns, a trend that typically follows post-halving periods.

Bitfinex analysts predict a continued price consolidation for Bitcoin post-halving, while altcoins are gaining investor attention due to their potential for higher returns.

Bitcoin’s Price Undervalued, Says Bitfinex

Bitfinex’s latest market report suggests that Bitcoin is undervalued, with the Market Value to Realised Value (MVRV) ratio currently at 2.21. This is seen as a potential entry point for investors, as historical patterns show substantial returns when MVRV dips below its 90-day average. However, Bitcoin’s dominance is experiencing a decline, with Ethereum and other altcoins outperforming it.

Shift in Investment Patterns Due to Slower US Economic Growth

This shift in investment patterns is attributed to a federal economic report highlighting slower-than-anticipated growth in the US economy. The real Gross Domestic Product (GDP) annual rate dropped to 1.6 percent in the first quarter of 2024, down from 3.4% in the last quarter of 2023. This has led investors to search for potentially higher returns in altcoins.

Macroeconomic Factors Impacting Bitcoin’s Performance

Bitfinex attributes the slowdown in the US economy’s growth to microeconomic factors, such as higher interest rates that discourage investors from allocating funds to volatile assets like Bitcoin. The Fed’s key inflation gauge, the personal consumption expenditures (PCE) index, saw no change in March, holding steady at a 0.3 percent increase month-over-month. On a year-on-year basis, PCE is at 2.7 percent, which is above the Fed’s 2% inflation target and exceeds consensus forecasts.

Investors Turning to Altcoins as Bitcoin ETF Flows Dry

Bitfinex’s report also highlights a shift towards Altcoins, as evidenced by recent US Bitcoin spot ETF inflows. Following the SEC’s approval of Bitcoin ETFs in January, these ETFs have gained widespread adoption, with roughly $12 billion flowing into them. However, these inflows have lost momentum by April, leading to a further shift in investor focus towards altcoins.

Conclusion

While Bitcoin’s price consolidation may continue for up to two months post-halving, the cryptocurrency’s dominance is experiencing a decline. This, coupled with slower US economic growth and drying Bitcoin ETF flows, is leading investors to shift their focus to altcoins in search of potentially higher returns.