Crypto dreams and reality collide again in Bitcoin heartbreak rerun

After recording a remarkable price surge in the past seven months, Bitcoin lost over 16% in April making it the worst month for the cryptocurrency since November 2022. This marks a notable shift from the euphoria of the hype cycle built around the Bitcoin halving event that occurred on April 18. The downward spiral is triggered mainly because of outflows from spot ETFs (exchange-traded funds) in the US. ET explains the factors behind current market volatility.

What is Bitcoin Halving?

Bitcoin halving is a once-in-four-years event when the supply of BTC is cut into half, making the currency more valuable. The last halving occurred on April 18, 2024, when reward for each BTC miner was cut from 6.25 BTC to 3.125 BTC, thus cutting the overall new currency supply into half.


What has been the price movement after this halving cycle?

The coin, which touched an all-time high of $75,830 on March 14, started falling into red on April 13 when it was priced at $67,188. Since then, BTC has touched as low as $56,858 on May 2 when BlackRock and Grayscale ETFs saw outflows for the first time.

What are the other factors at play?

Sumit Gupta, cofounder, CoinDCX, said, "The post-halving stagnation in Bitcoin's price suggests that the event was likely already factored into the market, with investors adjusting their behaviour beforehand, mitigating the anticipated price surge." He said macroeconomic factors such as recent interest rate hikes and geopolitical tensions, like the Israel-Iran conflict, are exerting downward pressure on Bitcoin prices.

What can investors expect going forward?

Despite short-term downward pressures, historical patterns suggest that such corrections often precede periods of renewed growth.

For instance, after the previous halvings in 2012, 2016 and 2020, the bitcoin price ran up about 93x, 30x and 8x, attaining peaks in different timeframes within 12-18 months.

“Bitcoin's price may experience short-term corrections or dips following a halving, but historical precedent suggests that the halving could catalyse significant shifts in the crypto market, leading to a new all-time high in the upcoming months,” said Shivam Thakral, CEO of Indian crypto exchange BuyUcoin, adding that many investors view Bitcoin as a hedge against inflation.

“It's premature to conclude that we've reached the end of the hype cycle,” said Jyotsna Hirdyani, South Asia head at crypto exchange Bitget.

As for price predictions, BTC and Ethereum (ETH) may experience a pullback in May, followed by a volatile rebound, she said. “BTC is expected to trade within the range of $56,000 to $68,000 during May, while ETH may exhibit even greater volatility, fluctuating between $2,600 and $3,600,” she said.

“Despite short-term fluctuations, if we look at historical trends, there’s a possibility of Bitcoin surging to new ATHs of $100,000 and beyond within the next 10-18 months,” Hirdyani added.