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It is inevitable that Bitcoin will correct itself, but will it do so before or after the 2024 halving?

Navigating Bitcoin's Impending Correction: Timing the Storm and Preparing for Opportunities in Cryptocurrency Markets

Not if, but when will the leading cryptocurrency make a correction? This is the issue that worries every Bitcoin investor. It appears that Bitcoin will experience a decline at some point soon after reaching previously unheard-of heights in 2023. However, opinions among cryptocurrency experts are still sharply split about whether the drop occurs before or after the much-awaited “halving” of Bitcoin in 2024.

The term “halving” describes the intentional reduction in Bitcoin mining incentives that takes place every four years. As of right now, each block pays miners 6.25 BTC. Early in 2024, though, that subsidy is cut in half to 3.125 BTC. Significant cryptocurrency bull runs have already been sparked by this extreme supply shock.

Nevertheless, once the initial excitement fades, it frequently ushers in severe post-halving adjustments. Whichever comes first in this cycle—the halving or the correction—largely depends on who you ask.

Consider the analyst CryptoOnchain as an example. Recently, he issued a warning that the sell-off might begin at any time due to measures such as the Short-Term Holder (STH) Spent Output Profit Ratio (SOPR) rising above 1. Profit-taking by investors is indicated by values greater than 1, which could portend wider market weakness. If this is the case, CryptoOnchain predicts a quick drop in Bitcoin to $48,000.

Still, skeptic Michaël van de Poppe believes these worries are exaggerated. He says the drop that is coming could be “shocking,” but he thinks Bitcoin will hit $58,000 once again before that happens. Then, as has happened after prior halvings, prices would start to disintegrate.

This disparity demonstrates how difficult it has become for Bitcoin to move forward. The main source of unpredictability is the length and date of the unavoidable cool-off phase. Estimates varied widely, from sharp declines below $40k to momentary drops to a little around $50k. Potential triggers might include the surrender of miners and regulatory risks to whale profit-taking.

However, one theme keeps coming up: everything that rises must also fall. Furthermore, gravity is calling for Bitcoin once more after it shot to a high of almost $69,000 in late 2023.

Metrics flash mixed signals on timing with conflicting indicator readings, making the exact halve or adjustment schedule difficult to pinpoint. When the STH-SOPR exceeds 1, it suggests that some investors are locking in profits from Bitcoin’s meteoric rise. Other on-chain signals, nevertheless, do not yet exhibit this kind of selling weariness.

In spite of significant losses in 2022, miners, for example, appear to be optimistic. Recently, a number less than 0.5 was flashed by the Puell Multiple. In the past, low levels have discouraged miners from selling since they render operations unprofitable. Things might get worse with more network complexity, particularly if costs don’t change. But for the time being, miners don’t seem ready to put further selling pressure on Bitcoin.

Similar tales are told by exchange reserves. Over the past year, as owners have withdrew their Bitcoins to self-custody, the balance on sites like Coinbase and Binance has drastically decreased. A reduction in inventory indicates a decrease in the number of traders seeking to sell their holdings. In 2023, the rate of outflows has decelerated, though. Furthermore, exchange balances are well above multi-year lows. Thus, cautionary signals persist despite the positive results.

In the end, speculative dynamics will determine the course of Bitcoin. A cascading sell-off spiral could occur if enough investors become alarmed and flee the market. However, additional contributions from institutional investors may potentially prevent any significant decline. In the interim, reducing hype on its own might help prices rise.

As stated differently, the adjustment may occur at any time, but a precise date is yet unknown.

Traders are on edge due to impending volatility.

Most traders prepare for the turmoil ahead, regardless of the timing. Markets are itching for a breakthrough after Bitcoin’s multi-month period of aimless price activity. Wild swings are probably ahead, whatever way the Bollinger bands break.

However, not every investor fears what lies ahead. Top Bitcoin investor Michael Novogratz stated to Forbes:

“A Bitcoin market crash just represents an opportunity for me to buy more once the dip finishes.”

Novogratz and other cryptocurrency enthusiasts are prepared to seize discounted Bitcoin when the market pullback ends. Additionally, swing traders may make a fortune if their short trades are timed right. On the other hand, those who are unprepared for manic volatility run the danger of suffering through difficult liquidations.

Of course, Bitcoin has experienced its fair share of excruciating drops in value. Following parabolic rises, massive drawdowns of 80%+ are common. However, the crypto king gets back up and soars to new heights later on, exactly like clockwork.

Bitcoin’s 2023 comeback has already increased its market value by around $700 billion. As a result, even though the approaching collapse hurts, investor wallets are already full of cash. Maybe this is the time when the crypto-hydra is finally defeated. However, thus far, it has been unwise to wager against Bitcoin’s return.

Bitcoin Will Probably Return to Earth Before Making a Long-Term Space Travel

If the past of cryptocurrency is any guide, Bitcoin most likely retests lower levels before its next significant upswing. The most recent run broke through previously uncharted ground, opening up pullback targets. With Bitcoin’s phenomenal rise over the last year, a decline below $40k cannot be completely ruled out.

Though painful as the correction may be, most economists do not anticipate a long-term bear market similar to those of 2018 or 2022. This cycle of demand from institutions is excessive, and the hype surrounding the post-halving period should soon arouse animal spirits. Although Bitcoin could need to get rid of some surplus, its long-term trend is probably still going up.

How violent the following swing lower gets is therefore the more important question. Traders are waiting tensely for the crescendo, wondering if the collapse will occur before or after the halving event in 2024. The what is ultimately more important than the when. In any case, it appears risky to be caught overexposed during the drop.

Thus, traders must choose between hedging now to avoid a plunge and bracing for the impending storm. In any case, the correction of Bitcoin is rapidly approaching. As it gets closer, it’s best to avoid falling asleep.

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