It’s been three weeks since bitcoin halved, and in the short term, this rare event didn’t produce the price surge that bulls were hoping for.
It could be argued that much of this was out of BTC’s control. Rising tensions in the Middle East have led to sharp and sudden drops in cryptocurrency markets.
We saw this on April 19, when bitcoin fell below $60,000 following news that Israel had launched an attack on Iranian territory. While prices recovered quickly, further unrest or escalation of this increasingly complex conflict could lead to further declines.
While $60,000 proved to be a significant psychological threshold for BTC, it was severely tested on May 1 when prices fell to a low of $56,555.
Here are five things we’ve learned since the halving that may help us determine what comes next.
1- April was the worst month for bitcoin in nearly two years
The Cryptocurrency Fear and Greed Index has been showing “greed” or “extreme greed” grades for weeks, but traders got a sobering reality check in early May.
Why? Because BTC fell hard in April. After a record high of $71,329.30, prices collapsed 14.95% – and closed the month at $59,228.70.
2. Predictions about bitcoin’s prospects are mixed
Former BitMEX exchange founder Arthur Hayes claims that he saw this coming from the start – a perfect cocktail of events pulled bitcoin down.
Nevertheless, he believes bitcoin has hit a localized low, and until August, “the price will be in the $60,000 to $70,000 range.”
3. Times are tough for bitcoin ETFs
After the initial euphoria following their approval by the US Securities and Exchange Commission in January, appetite for exchange traded funds based on the spot price of bitcoin seems to be starting to cool.
SoSo Value data showed record outflows from BTC ETFs of $563 million on May 1, and the six-day streak of negative values was broken on May 3, when total inflows totaled $378 million. Bloomberg Intelligence analyst James Seyffarth said at the time that “inflows and outflows are part of the norm in ETF life.”
4. Nervous anticipation for miners
CryptoQuant recently reported that bitcoin miners could face serious problems if prices don’t recover in the coming weeks – rising electricity costs and a steady decline in block rewards will make the industry feel pinched.
But there’s a problem: trading volumes across the board tend to drop during the summer months – bitcoin typically performs below average from June through September.
5.Be on the lookout
Some CEOs are not stopping there and continue to buy as much bitcoin as they can.
MicroStrategy now owns 214,400 BTC, paying an average of $35,180 per coin. Given that bitcoin was trading at $63,600 at the time of writing, Michael Saylor’s big bet means the company is making a paper profit of $8.1 billion.
Meanwhile, the blockchain, led by former Twitter CEO Jack Dorsey, has begun diverting some of its gross profits to buy more BTC.
It’s impossible to predict where bitcoin will go next, but there seems to be reason for optimism.
