Carrying X, an analyst now says bitcoin is getting closer and closer to a critical juncture. This “danger zone” has historically coincided with sharp price corrections ahead of bitcoin halving events, raising concerns about a potential drop in the coming weeks.
bitcoin is approaching the “danger zone”
According to price charts, bitcoin is trading above $72,400 at the time of writing. However, as time goes on, the currency is getting closer and closer to the “Danger Zone.” Typically, when prices are in this region, as shown by past price action, the coin tends to pull back sharply, undoing gains. This area is time-based and takes place approximately two to four weeks before the halving.
The network will halve its mining rewards in approximately 33 days in mid-April 2024. Therefore, if past price action is any guide, it is likely that the expected sell-off by miners could send the coin lower, making a dent in the current optimism.
Miners who receive bitcoin rewards for verifying transactions often sell portions of their holdings to secure profits. By liquidating their reserves, they can manage fluctuations in income after halving it. Additionally, by selling their btc through exchanges or over-the-counter (OTC), they can diversify their assets or invest in their mining infrastructure to remain competitive.
Will BlackRock and institutions avoid a price drop?
While there is a chance that btc could fall before halving, some members of the community are optimistic. Most are convinced that the approval of spot bitcoin exchange-traded funds (ETFs) has been a game-changer. In his assessment, the billion-dollar influx of spot bitcoin ETFs will dampen selling pressure from miners.
Furthermore, the feeling is that the current market is less driven by retail euphoria, as has been seen in previous cycles, and more by large institutional players such as Blackrock. These institutional players are now the main source of demand, providing a sense of comfort about the stability of the market and its growth potential.
While technical indicators suggest a potentially volatile period for bitcoin in the next two to four weeks, changing market dynamics with increased institutional participation introduce new variables. As fundamental factors are more influential than technical price predictions, only time will tell if the bulls will triumph over the expected deluge of mining liquidations.
Until now, Ki Young Ju, co-founder of CryptoQuant, sample that mining companies, especially in the United States, including Marathon Digital and Riot Blockchain, are HODLing. In recent years, its holdings have increased and Marathon Digital increased its reserves by more than 350%.
Featured image from Canva, TradingView chart
