Due to the impending halving event, which will reduce daily Bitcoin output by 50% to 450 BTCs, stocks of bitcoin mining companies fell by 30%.
The value of the top publicly traded Bitcoin mining companies’ equities has significantly decreased in tandem with the upcoming April 20 Bitcoin halving event. The highly anticipated event, which will cut the rewards for miners in half, is in only three days, and the stock prices of mining companies are under pressure due to anticipation of lower income.
Miners of Bitcoin face the heat of Halving
As of Tuesday, the stocks of prominent Bitcoin miners, including Riot Blockchain Inc., CleanSpark Inc., and Marathon Digital Holdings Inc., have all seen decreases for the third day in a row. In addition, there has been a about 28% decrease in the value of the exchange-traded fund (ETF) called Valkyrie Bitcoin Miners this month.
Moreover, investors now feel less risk-taking after the weekend’s spike in international tensions. The CEOs of these businesses, nevertheless, are upbeat in spite of these difficulties. They include elements like low-cost operations, improvements in equipment efficiency, and rising interest in digital assets as potential remedies for the software update projected $10 billion in yearly revenue losses. Jason Les, CEO of Riot Platform, stated in an interview with Bloomberg:
“Riot is here for the long term. Our long-term investment thesis on Bitcoin is strong and I think we have the setup for a very positive movement in Bitcoin over the next several months here.”
The amount of Bitcoin produced per day will decrease from 900 to 450 due to the impending halving of the cryptocurrency. Hut 8, a bitcoin miner, has already declared a 30% reduction in production expenses.
Bitcoin price action
In the vicinity of the halving time frame, the price of Bitcoin is behaving precisely as predicted. According to past patterns, the price of Bitcoin (BTC) had a robust pre-halving retrace before to the halving event, reversing 18% from its all-time high.
Analysts predict no significant change in the price of BTC for a few weeks after the half of the cryptocurrency since miners may sell their holdings to make up for the drop in earnings. But in a few weeks, investors may be setting off a massive bull market for Bitcoin.
Additionally, miners are betting on higher demand resulting from the recently introduced spot ETFs, which is anticipated to raise Bitcoin prices and offset the halving’s detrimental consequences. The CEO of Cipher Mining, Tyler Page, stated:
“I think it is very hard to predict Bitcoin prices on any kind of short-term time frame. But over the course of years, I think you have seen a steady course of adoption. I think in large, sort of longer time frames, we can remain very very bullish on the adoption of the network.”
Bitcoin Halving is underestimated by the cryptocurrency market, according to Bitwise
Previous Bitcoin halvings had minimal fluctuation in price in the month after them, but Bitwise Asset Management reports that the following year witnessed substantial increases.
The much-awaited April 20th Bitcoin Halving is just a few days away, but Bitwise Asset Management notes that historically, the month that follows the highly anticipated event has seen poor market activity.
Bitwise mentioned the previous price movement in an April 16 X post. The company has seen price drops for the previous three halving events of Bitcoin, but in the year that followed, the price had at least triple-digit percentage point increases.
Bitcoin increased by 9% in the month following the 2012 halving, but it increased by 8,839% in the following year.
Bitcoin had a similar pattern at 2016 halving, falling 10% the next month then rising 285% to reach a top of $20,000 in 2017. Once more in 2020, the month after the halving witnessed a 6% price increase, and the year after saw a 548% pump.
Bitwise stated that although the picture shows an intriguing pattern, the data is restricted. “The market overestimates the halving’s short-term effects while undervaluing its long-term effects.”
For the first time, prior to its halving, Bitcoin has reached an all-time high within the current market cycle.
The cryptocurrency dropped 16% to a low of $61,500 after reaching its current top of $73,679 on March 13.
Business CEOs have similar short-term pessimism. Markus Thielen, head of research at 10x Research, forecast on April 13 that a $5 billion miner sell-off may occur following the halving, which would put negative pressure on markets.
CEO of Marathon, Fred Thiel, announced that the rally that would have followed the halving had already been factored in.
A list of the market correction magnitudes since the 2022 bear market bottom was shared on X by trader and analyst “Rekt Capital” on April 16.
Five notable declines, with percentages ranging from 18% to 23%, were observed. The markets have currently dropped 16% and indicated that more declines may be ahead.
In the meantime, “Cold Blooded Shiller,” a fellow expert, pointed out that 30% declines were usual and suggested that Bitcoin may drop to about $51,000.
For the third straight day, GBTC outflows surpass inflows into other spot bitcoin ETFs
For the third day in a row, net outflows have occurred from spot bitcoin exchange-traded funds in the US. Yesterday saw a little over $58 million leave the goods, bringing the total net inflow to date down to about $12.43 billion.
As usual, Grayscales converted bitcoin trust, GBTC, was mostly to blame for the net outflows. Yesterday, the ETF had over $79.4 million leave, according to SoSoValue statistics. There were also net withdrawals from the Ark 21Shares Bitcoin (BTC) ETF, with over $12.88 million going out of the fund.
The iShares Bitcoin Trust witnessed inflows of $25.78 million, which led the other spot bitcoin ETFs, which experienced minor inflows between $1.37 and $3.56 million.
Spot bitcoin ETF volumes have generally decreased from their early March peak, although they have steadily increased during April. Monday’s cumulative volumes exceeded $215 billion.
Moreover, both directions’ flows have decreased. Since March, the gap between inflows and outflows of spot bitcoin ETFs has gradually narrowed.
The Block’s Bitcoin Price Page indicates that the price of Bitcoin is currently trading over $64,300 and up more than 2.6%. The leading cryptocurrency is anticipated to halve its block reward on Friday.
Read more: BITCOIN HALVING – HISTORY AND EFFECT