- Bitcoin price is down today as traders realize profits and futures liquidations surge
- Bitcoin is likely in its standard pre-halving retrace phase, following historical patterns from previous halvings
- Short-term holders currently have the highest BTC supply since July 2021, potentially leading to continued price declines
Bitcoin‘s price has seen significant volatility in recent days as the market enters the pre-halving phase. With the halving estimated to occur on April 20, history suggests further swings lie ahead before prices stabilize post-halving.
Pre-Halving Retracement Falls in Line With Previous Cycles
According to analysts, Bitcoin’s recent 38% drop from its peak matches previous pre-halving retracements. The 2016 and 2020 halving events were preceded by 38% and 20% declines respectively as part of a predictable pre-halving pattern. This suggests the current drawdown is normal market behavior rather than cause for concern.
Liquidations and Declining Trading Volumes Add Selling Pressure
Over $115 million worth of long positions were liquidated in the futures market on April 2nd, coinciding with increased volatility. Bitcoin trading volumes have also dropped more than 50% from their 2022 peak, indicating declining interest in spot markets. With less buying activity to absorb selling pressure, liquidations likely contributed to Bitcoin’s recent weakness.
Short-Term Holders Sell Into Strength
On-chain data shows short-term Bitcoin holders now have the largest supply since July 2021. Unlike long-term holders, short-term holders are more inclined to sell into price strength. With BTC hitting new highs in March, short-term holder selling likely accelerated Bitcoin’s decline.
Macro Factors and Upcoming Halving Also in Play
Bitcoin’s price continues to track macroeconomic developments, so events like rising interest rates may create headwinds. However, the upcoming halving should constrain BTC supply growth over the medium-term. With strong institutional adoption underway, most analysts remain constructive on Bitcoin’s long-term trajectory despite the recent pullback.
