Bitcoin’s upcoming halving event is generating a lot of buzz among crypto investors and the media. However, this time around, the market dynamics have changed due to the introduction of the spot Bitcoin ETF. In previous halving cycles, we would see a significant increase in volatility, with a sell-off followed by a sharp rise to a new all-time high. But this time, the sell-offs have been more subdued, indicating a softer rally after the halving. This is due to two factors: the increasing number of long-term Bitcoin holders and the impact of the spot Bitcoin ETF.
The percentage of long-term Bitcoin holders has reached a record high, with more than 70% of the total circulating supply held by these holders. This has led to a decrease in available supply on exchanges as more holders adopt a long-term investment approach. Additionally, the spot Bitcoin ETF has been absorbing more BTC supply from the market than miners can generate. On average, the ETFs have been acquiring around 10,000 BTC per day, while miners are only producing 900 new BTC daily. This scarcity is driving up the price of Bitcoin.
The arrival of the spot Bitcoin ETF has also resulted in a decrease in long-term volatility. ETF investors tend to have a more long-term perspective, which has a dampening effect on short-term price fluctuations. While there has been a recent spike in volatility leading up to the halving, it remains lower compared to previous halvings. This shift in behavior is due to the entry of traditional equity investors into the spot Bitcoin ETF market. These investors have a longer-term investment horizon and make decisions based on macroeconomic conditions and long-term return potential.
For investors looking to profit from the halving, a more traditional investment approach is required. They need to monitor the assets under management of spot Bitcoin ETFs and keep an eye on the actions of long-term holders. The days of seeing 600% returns after a halving are likely over, but investors can expect steadier and more reliable returns. This aligns better with the goals of most investors who prefer stable returns over extreme volatility.
In conclusion, the Bitcoin halving event will still have an impact on the market, but the dynamics have changed due to the introduction of the spot Bitcoin ETF. Investors need to adjust their strategies and think more like traditional equity investors. While the potential for astronomical returns may be diminished, the trade-off is a more stable and appealing investment prospect.