Bitcoin Drops Today as Demand for Spot ETFs Declines Near Halving

As the calendar moves towards the much-anticipated fourth Bitcoin halving, scheduled to take place in less than three weeks, the cryptocurrency market finds itself in decline mixed with uncertainty. The global crypto market capitalization is $2.58 trillion, a decrease of 4.04% in the last day.

Bitcoin price failed to stay above the $70,500 resistance zone and fell close to $68,050. BTC is down nearly 5% and is currently consolidating losses. Likewise, most major altcoins are testing major supports. ETH fell more than 5% and tested the $3,420 support. XRP fell below $0.60. ADA fell below the $0.62 pivot level. Solana is trading near $189 and is down 5%.

This significant event, which will halve the reward per block mined from 6.25 to 3.125 BTC, is historically known for preceding phases of significant appreciation of the cryptocurrency. Despite this, investor reaction has been contained, with Bitcoin showing a modest appreciation of 2.6% in the last 14 days. This behavior occurs even after the launch of spot ETFs in January, which had initially boosted the market.

Spot Bitcoin ETFs, an innovation in early 2024, represented a milestone in access to investment in cryptocurrencies. Raising more than US$12 billion in three months, they stood out for facilitating the entry of traditional investors into the crypto market, currently representing around 4.20% of all bitcoins in circulation. The ease of investment, compared to the complexities of cryptocurrency exchanges, and the prospect of more attractive rates, fueled the initial euphoria, with expectations of a new bull cycle similar to the 2020 post-halving.

However, recent signs point to a cooling of this euphoria. Data indicates a decrease in interest in these ETFs, which may be a sign of caution from investors. Experts point out that the lack of new supply absorption by these funds could be contributing to the stagnation of Bitcoin prices. The theory is that with the halving reducing the supply of new bitcoins, an increase in price was expected due to greater scarcity. However, current dynamics suggest that other factors are influencing the market.

Some of these factors include the diversification of cryptocurrency investments, with investors seeking potentially more profitable alternatives such as Solana-based tokens and meme coins. Cryptocurrency market volatility also remains a factor of concern, influencing long-term investment decisions.

The complexity of current trends highlights the unpredictable nature of the cryptocurrency market. Investors and analysts closely watch developments, trying to anticipate the market’s next moves. As the halving approaches, the crypto community remains attentive to the possible changes that this event could trigger in Bitcoin’s supply and demand dynamics.

Disclaimer:

The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment or other advice. Investing or trading cryptocurrencies carries a risk of financial loss.