Bitcoin Plummets After Halving: Short-Term Correction or Long-Term Downtrend?

As of early May 2024, Bitcoin has experienced a steep decline in price following its successful fourth halving. Altcoins have also followed suit, exhibiting a general downward trend. This price movement stands in stark contrast to the significant price surges that followed the previous three halvings. Several factors are being analyzed as potential causes for this recent decline.

1. Decreased Inflow into Spot ETFs:

While institutional investors actively invested in Bitcoin ahead of the fourth halving, driving up its price, the inflow of new funds into spot ETFs has dwindled since the halving. This suggests that institutional investors are adopting a cautious stance, observing market conditions post-halving.

2. Small Scale of Hong Kong ETF:

Bitcoin spot ETF trading has commenced in Hong Kong. However, the scale of this ETF remains considerably smaller compared to its US counterpart. Consequently, the impact of the Hong Kong ETF is limited, and its influence on investor sentiment appears negligible.

3. Unmet Expectations for Post-Halving Price Surge:

Leading up to the fourth halving, some investors anticipated a rapid price surge for Bitcoin following the event. However, the actual price movement post-halving fell short of these expectations, leading to investor disappointment and contributing to the downward trend.

4. Deteriorating US Economic Indicators:

Recent US economic indicator announcements have raised concerns about a potential economic slowdown, as expectations for interest rate cuts have diminished. This economic uncertainty dampens investor sentiment and discourages investment in riskier assets like Bitcoin.

Short-Term Adjustment vs. Long-Term Downtrend:

Whether the current Bitcoin price decline represents a short-term adjustment or the beginning of a prolonged downtrend remains unclear. Historical Bitcoin market cycles have witnessed corrections of over 20%, and this recent decline could simply align with past patterns.

However, considering the cautious approach of institutional investors, the small scale of the Hong Kong ETF, and investor disappointment, a significant price surge in the near term seems unlikely. Despite these challenges, many experts maintain a positive long-term outlook for Bitcoin's value appreciation.

Conclusion:

The Bitcoin market currently faces considerable uncertainty. Instead of being swayed by short-term price fluctuations, investors should adopt a long-term perspective, carefully evaluate Bitcoin's value, and formulate sound investment strategies.