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Bitcoin’s Price Movement Resembles Previous Years; What’s Next?

  • Following a sharp drop in the middle of the month, Bitcoin rose at the beginning of the week due to growing expectations around spot exchange-traded fund (ETF) applications.
  • According to CryptoQuant analyst JA Maartun, BTC’s price movement was very similar to its trajectory in 2016 and 2020. Maartun predicted that relative stability would continue until the halving.
  • Since the total earnings from each block will decrease from 6.25 to 3.125, miners may be incentivized to use their resources to receive higher rewards until the halving occurs.

Bitcoin is leaving behind a challenging month of August; the dominant sentiment in Bitcoin has maintained its bullish outlook and investors have remained committed.

Bitcoin Market Completes August

Bitcoin-BTC

August may be coming to an end, but not before mysterious volatility returns to the crypto markets. Following a sharp drop in the middle of the month, Bitcoin rose at the beginning of the week due to growing expectations around spot exchange-traded fund (ETF) applications.

Maximalists believed that this optimism would keep Bitcoin in good shape ahead of the significant halving event, which is about eight months away. This four-year event reduces block rewards by half, thereby reducing the circulating token supply. Historically, these events have followed bull markets, creating hopes for a scenario similar to 2021 for the coming year.

Furthermore, ongoing trends revealed some similarities to previous halving periods. According to CryptoQuant analyst JA Maartun, BTC’s price movement was very similar to its trajectory in 2016 and 2020. Maartun predicted that relative stability would continue until the halving.

Bitcoin-price

Aside from price movement, the accumulation activity of long-term holders (LTH) also resembled historical patterns. Approximately 75% of the supply was under the protection of these diamond hands, similar to the 2016 and 2020 cycles.

bitcoin-utxo-age-bands

In addition, Bitcoin’s hash rate, or the computational power used to create blocks on the network, has steadily increased over the years.

Since the total earnings from each block will decrease from 6.25 to 3.125, miners may be incentivized to use their resources to receive higher rewards until the halving occurs. This could further increase the hash rate.

Bitcoin-Hash-rate-scaled

Is HODLing Here to Stay?

When paying attention to the formations above, an interesting new finding emerged. Since the last halving in May 2020, Bitcoin’s supply on exchanges has undergone a trend reversal. As the HODLing sentiment became more widespread, long-term users started withdrawing their BTC to self-custody.

Therefore, it will be interesting to see how this trend shapes up after the upcoming halving. Will LTHs sell a significant portion of their assets during the bull market period, or will they continue to hold BTC as a safe haven asset? Positive sentiment emphasized the bullish spirit among market participants.

bitcoin-weighted-sentiment

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Lucien Renard
Lucien Renardhttps://en.coinotag.com/
Lucien Renard is a 24-year-old writer specializing in cryptocurrency analysis and price action. With a focus on technical analysis, Lucien provides valuable insights into market trends and potential opportunities for investors.
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