Bitcoin experienced a slight decline on Thursday, extending recent downtrends as cryptocurrency markets grappled with the looming specter of higher U.S. interest rates, which dampened risk appetite among investors.
The focus of market participants was centered on the imminent halving event and its potential implications for Bitcoin‘s long-term supply dynamics.
Within the past 24 hours as of 13:54 ET (18:54 GMT), Bitcoin recorded a 0.3% decrease, settling at $63,103.5.
Anticipation swirled around the halving event, expected to coincide with the generation of block no. 840,000 on the Bitcoin blockchain. With less than 300 blocks remaining until the event, slated for April 20, attention remained fixated on its impending impact.
The halving will effectively reduce the rate at which new Bitcoin is mined by halving rewards for miners, reinforcing the narrative surrounding Bitcoin’s scarcity and its potential to bolster token prices.
However, historical analysis suggests that past halving events have not consistently translated into immediate price surges for Bitcoin, with external factors such as interest rates and risk sentiment often exerting significant influence over its price trajectory.
While Bitcoin’s ascent in recent years has been remarkable, the correlation between halving events and immediate price appreciation remains tenuous.
JPMorgan forecasts potential downward pressure on Bitcoin post-halving, citing overbought market conditions and analyzing open interest in bitcoin futures. Moreover, the current price of Bitcoin exceeds JPMorgan’s volatility-adjusted comparison with gold and the projected post-halving production cost, suggesting a potential correction.
The bank also highlights the impact on mining companies, anticipating a significant drop in hashrate and potential consolidation among miners, particularly among publicly-listed entities.
Amidst broader market uncertainties, fueled by speculation surrounding U.S. interest rates and inflation data, cryptocurrency prices witnessed sustained losses. Traders reevaluated expectations for a June interest rate cut by the Federal Reserve, further weighing on market sentiment.
Despite a mild pullback in the dollar, cryptocurrency prices failed to capitalize, as profit-taking ensued following recent highs.
Ethereum, the second-largest cryptocurrency, recorded a 1.1% decline to $3,039.28, while Solana and XRP experienced modest gains.
This year’s gains in the cryptocurrency market have predominantly favored Bitcoin, particularly following the approval of spot ETFs, reinforcing its position as the dominant force in the crypto space, commanding over 55% of the overall market value.
