Since the beginning of 2024, the Bitcoin environment has
been at the center of considerable growth as a result of the exchange-traded
funds and the halving. These two events have propelled the prices forward by a
considerable margin, but it seems now that BTC has entered a new slump. For
some this is a chance to look into how to buy Bitcoin and
grow their portfolios. It’s important to say that the current downtrend
is nowhere near as intense as its predecessors and that the general market
sentiment remains optimistic. However, there’s no denying the fact that the
marketplace is navigating something of a difficult period.
Plummeting earnings
The halving arrived on the Bitcoin blockchain on April 20th,
and it immediately slashed rewards in half. The scarcity the mining creates is
one of the main characteristics making the marketplace a more attractive space
for investors from all over the world since the rarer an asset is, the more
likely it is for it to be more valuable as well. However, investors and
analysts have also discussed the fact that the revenue miners make will drop
significantly and that most of them will have to either invest in new
equipment, relocate to areas where electricity costs are not as elevated, or
simply wait until the prices climb back up again in order to drive
profitability.
Mining companies have already begun reporting on the
earnings they recorded post-halving, and the figures show that they are the
lowest they have been in more than two years. Many have started upgrading their
equipment, but the endeavor cannot happen overnight, and the costs are often
estimated to amount to hundreds of millions of dollars, not an amount you want
to deal with when your company is not going through the best of times. The
investment in brand-new hardware is the best bet in the rush to remain
profitable and avoid causing permanent financial damage.
Production updates also show that companies must boost their
corporate energy efficiency by almost 10%, but fleet upgrades will take a little
more time to be fully completed.
The future
Investors are always interested in what the future holds for
BTC since that is the only way to create a comprehensive strategy. The arrival
of the halving is typically regarded as a positive thing across the crypto
community, as growth for Bitcoin normally translates into development for the
entire ecosystem as well. But there’s also a downside, which in 2024 is
represented by a nearly 6% increase in network difficulty levels compared to
the previous year. The impact on the earnings of miners is severe, with some
risking to become entirely unprofitable. At the moment, year-over-year numbers
showed that gains were down approximately 30% in April, a hefty
difference.
And the end of this relatively difficult period is nowhere
in sight, as most marketplace users estimate that the price consolidation could
last for at least two months. Although the halving has become synonymous with
price growth, this doesn’t occur straight away. In the past, it has taken approximately
half a year for the true scope of the halving to begin showing. 2024 is
expected to follow in the footsteps of the previous halvings, and most
investors are convinced that levels as high as $100K will be achieved by the
end of the year.
In the long term, the values are predicted to climb even
further and reach levels around $200,000 to $300,000. It is not yet clear how
the market will behave at that level, as Bitcoin has never got even close to
that area ever before. However, considerable volatility is almost a certainty,
and the same conditions will rule the market in 2024 as well up until the point
of consolidation.
Short-term
And while there’s no denying the importance of the long-term
when dealing with the crypto market, you must not lose sight of the more
immediate future when coming up with a strategy. At the moment, market
researchers believe that the price action benchmark will carry on in May.
There’s also the macroeconomic context to take into account, as BTC has always
been influenced by movements in traditional marketplaces. 2024 has also brought
stronger economic performance, and markets are more resilient than their
counterparts during the previous years.
Both individual consumers and businesses are more informed
about the economy and the ways in which it could shift and change seemingly
overnight. That means that they are also much better prepared than during the
previous cycles and can make better financial decisions overall. As such,
investors must remain patient ahead of the consolidation, as it will likely
still take a few months for it to be completed. As always, not giving in to the
fear of missing out and carrying on with a predetermined plan is much more
likely to take your portfolio further.
4%
In the case of short-term holders, it might be more
challenging to deal with the market fluctuations as the losses appear to be far
more severe. After the prices dipped suddenly at the beginning of May,
short-term holders were left dealing with a 3% unrealized loss. Yet, analysts
believe the situation is not as severe as it could seem at first glance.
Letting panic dictate how you move forward would be a colossal mistake, but
statistically, this is likely to happen with recent buyers.
The price drop brought BTC to its lowest level in more than
two months, a tremendous amount of time for this demographic, as short-term
holders have been holding coins for 155 days at the most. Some believe that the
decline was the direct result of a sell-off that occurred as a result of the
Federal Reserve’s plans concerning interest rate hikes. Others point out that a
similar episode occurred in August 2023, and although the price pulled back
briefly, Bitcoin nevertheless remained firmly volatile.
Bitcoin
will have a good year in 2024, and it is set for growth and development that
will help the price mature and become more resilient. If you’re an investor,
remember to protect your assets and keep an eye out for price volatility to
remain safe.
