- Bitcoin long-term holders began easing off profit-taking after the March all-time high above $73,000
- The current market is in the early stages of a euphoria or price discovery phase, where price corrections are historically common
- The upcoming bitcoin halving is a significant driver of market speculation, with regulation playing an increasingly important role compared to previous cycles
The upcoming bitcoin halving in 2024 is creating speculation around how it will impact bitcoin’s price trajectory. According to VeChain founder Sunny Lu, regulation is likely to have a greater influence on bitcoin’s price after the halving than in previous cycles.
Regulation’s Growing Role in Bitcoin Price Movements
In the current cycle, major regulatory developments have driven bitcoin‘s pivotal price moments. For example, the Coinbase IPO, approval of bitcoin futures ETFs, and approval of spot bitcoin ETFs all catalyzed new bitcoin all-time highs following the last halving in May 2020.
According to Lu, this was the first halving cycle where regulatory events triggered multiple all-time highs. In the past, the market impact was more focused on the halving’s effect on bitcoin’s supply. However, macroeconomic forces are now playing a bigger role.
The Psychology of Halvings
Halvings inherently have a psychological impact on the bitcoin market by decreasing the bitcoin supply. This causes an increase in prices due to more limited supply.
In the past, the market impact of halvings was focused on this supply/demand shift. Now, the psychology around halvings interacts with broader macroeconomic forces driving the bitcoin price.
Conclusion
As regulation continues evolving, it is likely to have an amplified impact on bitcoin’s price reaction to the 2024 halving. While halvings still constrain supply, external factors like regulation are becoming greater price catalysts. The psychology around halvings is merging with the market’s reaction to macro events.
