Bitcoin’s halving event, which occurs every four years or every 210,000 blocks, has historically been accompanied by a price decline. However, market observers are now questioning whether the introduction of Bitcoin exchange-traded funds (ETFs) will soften this decline by attracting institutional investment into BTC. The next halving is expected to take place in April 2024 and will be the fourth in Bitcoin’s history, reducing the supply of new BTC and increasing its scarcity. The halving process consists of several stages: the pre-halving downside phase, the pre-halving rally, the pre-halving retracement, reaccumulation, and the parabolic uptrend. Investors believe that Bitcoin ETFs will play a crucial role in the pre-halving retracement phase by mitigating sell pressure. Recent data shows a significant demand for Bitcoin ETFs, with global Bitcoin exchange-traded products surpassing 1 million Bitcoin in assets under management and reaching a cumulative $10 billion in trading volume. This surge in demand suggests a potential shift towards Bitcoin ETFs as a hedge against falling prices during the retracement. The connection between Bitcoin ETFs and the halving process is expected to be evident in the third and fourth stages, where falling prices usually occur as investors exit their positions. However, the impact of Bitcoin ETFs on the halving remains speculative. Some experts argue that while ETFs could hedge against selling pressure, they could also amplify price decreases if demand does not continue positively. JPMorgan predicts a bearish scenario where Bitcoin could fall as low as $42,000 after the halving. However, the performance of Bitcoin ETFs thus far suggests that the bearish scenario is unlikely. The extent to which Bitcoin ETFs will affect the halving remains uncertain, and only time will tell.
Possibility of Bitcoin ETFs mitigating BTC price retracement prior to the halving