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Has Bitcoin Pre-Halving Price Rally Begun? A Comprehensive Analysis

By February 9, 2024February 12th, 20243 minute read
Note: This blog is written by an external blogger. The views and opinions expressed within this post belong solely to the author.

The crypto world is witnessing a momentous period as Bitcoin’s market has been buzzing with anticipation. Bitcoin prices have stabilized around $43,500 for almost a month, prompting questions about the next market move. Recent events, however, suggest that a bullish trend might be on the horizon, with Bitcoin experiencing a parabolic recovery, breaching $45,000 and surging beyond $46,000. This sudden uptick indicates a potential buildup of momentum, possibly in anticipation of the upcoming Bitcoin halving event.

Altcoins and Shifting Market Sentiment

Major altcoins, including Ethereum, Solana, Avalanche, Chainlink, Polygon, and XRP, have shown resilience by maintaining consolidation above their respective support levels. Interestingly, the recent bearish sentiment surrounding Bitcoin has played a role in contributing to this rally. Traders have significantly shifted their focus, and this change in sentiment could potentially fuel continued bullish momentum in the days ahead.

Trader Confidence and Asset Movement

A key indicator of heightened bullish sentiment is the movement of traders opting to store assets off exchanges. Santiment data provides insights into this trend, revealing a substantial decrease in balances on exchanges. This decrease in balances is reminiscent of the levels observed at the beginning of the 2017-18 Bull run in December 2017. This decline is indicative of a surge in Bitcoin’s dominance over other altcoins, aligning with the price surpassing the significant $46,000 mark.

Accumulation and Inactivity

One of the notable observations during this period is the consistent decline in balances on exchanges. This decline reflects a bullish outlook as traders accumulate Bitcoin without immediate plans for trading or selling. CryptoQuant data further supports this trend, showing that the percentage of inactive Bitcoin supply has reached an all-time high of around 70%. Since Bitcoin’s launch, this level has been unprecedented, emphasizing the market’s strong and active accumulation.

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Bullish Market Mindset

The surge in inactive supply highlights the prevailing bullish mindset among market participants. There is a palpable speculation of a robust Bull run in the days ahead. The pre-Bull run accumulation has extended significantly, raising the possibility of a strong and sustained rally. The key to Bitcoin’s trajectory lies in its ability to maintain these gains through the weekend. Should this momentum be sustained, there is optimism for Bitcoin to reach the coveted $50,000 milestone this month.

The Macro Economic Backdrop

Beyond the immediate crypto landscape, macroeconomic factors are playing a crucial role in Bitcoin’s recent surge. The United States government debt has reached a historical high of $34.2 trillion, prompting concerns about the sustainability of the fiscal path. In a recent interview, Federal Reserve Chair Jerome Powell acknowledged the long-term unsustainability, creating an incentive for the Fed to cut interest rates from the current 5.25% throughout 2024.

The Congressional Budget Office estimates a significant rise in the U.S. budget deficit, placing pressure on the U.S. dollar and the demand for U.S. Treasurys. The uncertain macroeconomic backdrop is providing an opportunity for scarce assets like Bitcoin, potentially explaining the rally to $45,000.

Bitcoin Futures and Derivatives Data

Turning to Bitcoin futures and derivatives data, it’s evident that there is room for further bullish momentum. Pro traders, often favoring monthly futures contracts due to the absence of a funding rate, have seen the BTC futures premium rise to its highest level in three weeks, breaking above the 10% threshold for bullish markets.

Moreover, the 25% delta skew in BTC options has entered the -7% bullish area for the first time in two months after Bitcoin broke above $45,000. This indicates moderate optimism, a positive sign considering concerns about worsening macroeconomic conditions negatively affecting Bitcoin’s price.

Conclusion

As Bitcoin experiences a resurgence in price and heightened confidence, the question of whether the pre-halving price rally has commenced gains prominence. Traders showcasing a bullish mindset and accumulating assets off exchanges indicate a market poised for a potential breakthrough. The current momentum, if sustained, positions Bitcoin for a journey toward the $50,000 milestone, making this month a pivotal period for crypto enthusiasts and investors alike.

The intricate dance of market dynamics, trader sentiment, and macroeconomic factors paints a compelling picture of Bitcoin’s trajectory in the evolving crypto landscape. As investors navigate these uncertain times, analyzing various indicators becomes crucial in understanding the potential scenarios that may unfold in the crypto market.

Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
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Shashank

Shashank is an ETH maximalist who bought his first crypto in 2013. He's also a digital marketing entrepreneur, a cosmology enthusiast, and DJ.

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