The worlds largest cryptocurrency, Bitcoin (BTC), has witnessed a downturn in the last two days. As of March 20, 2024, it is trading at $64,018.90, with a market capitalization of $1.20 trillion. Bitcoin had been hovering around the $70,000 level on March 12 but surged later, surpassing its previous all-time highs. On March 14, 2024, it set a new record of $73,750, with a market capitalization reaching $1.44 trillion.

The cryptocurrencys Fear and Greed Index shifted into the zone of greed, after being in a state of extreme greed for an extended period. Bitcoin prices soared to $73,750, establishing a new all-time high and surpassing previous peaks in the second week of the month. However, Bitcoin has since retreated below the $65,000 level owing to several speculated factors that may have contributed to the decline in prices.

Heres a deep dive into what may have caused Bitcoin to dip after a record high.

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Bitcoin experienced significant growth in the early weeks of March 2024, with a 74% increase in value and a remarkable 90% rise from its post-exchange traded funds (ETF) flows. However, the recent sharp corrections, occurring multiple times within two weeks, suggest a potential slowing down of the strong uptrend seen since the latter part of 2023. While this situation does not necessarily indicate a bearish outlook, it does suggest a period of consolidation for the broader crypto market.

It was inevitable for Bitcoin to experience a fall after reaching a great high, as it aligns with a fundamental principle of financial markets: what goes up must come down. Throughout history, every significant surge in asset prices has been followed by a period of correction or consolidation.

Bitcoins volcanic rise, particularly in recent months, had led to mounting expectations of a pullback. This natural ebb and flow in market dynamics reflects the cyclical nature of investor sentiment and the tendency for markets to seek equilibrium. Therefore, the decline in Bitcoins price following a period of substantial growth was not unexpected but rather a predictable outcome in the broader context of market behavior.

Another significant reason could be profit taking. After experiencing significant price increases, investors often decide to sell their holdings to realize their profits. This is a natural behavior in financial markets, including cryptocurrency markets. When prices rise rapidly, investors may become concerned about a potential reversal or correction, prompting them to sell their assets to lock in gains. As more investors start selling, it can lead to increased selling pressure and downward price movements. Profit-taking can exacerbate price declines, especially if there is a lack of buying support to counterbalance the selling pressure.

Market manipulation may have contributed to Bitcoin dipping to $64k. Cryptocurrency markets, due to their relative youth and lack of regulation compared to traditional financial markets, are susceptible to manipulation. Large investors or groups of traders, often referred to as whales, can intentionally manipulate prices to their advantage.

One common manipulation tactic is the pump and dump scheme, where a group of investors artificially inflate the price of a cryptocurrency through coordinated buying, creating a buying frenzy among retail investors. Once the price reaches a peak, the manipulators sell off their holdings at a profit, causing the price to plummet and leaving other investors with losses. Market manipulation can lead to sudden and sharp price declines, as it creates artificial demand and distorts market dynamics.

Its important for investors to be aware of these factors and exercise caution when trading in volatile markets.

The recent surge in Bitcoin, reaching a new all-time high, initially indicated a bullish momentum toward set targets. However, a recent pullback has shifted investors perspectives. March witnessed bullish trading, driving Bitcoin prices above $73,000, with the market capitalization exceeding $1.35 trillion, indicating a strong uptrend.

The present Bitcoin chart illustrates the markets volatility alongside the potential it offers. The subsequent retreat indicates a significant resistance zone that investors or buyers have not yet convincingly overcome.

Parth Chaturvedi, investment lead at Coinswitch Ventures, says the recent decline in Bitcoin prices represents a healthy correction in its rally that can be attributed to macroeconomic factors, as cryptocurrency is not isolated from broader market trends. The unexpectedly high U.S. inflation figures have dampened expectations of a Federal Reserve interest rate cut in the near future, leading to a sell-off in risk-on assets such as US and Asian stocks, as well as cryptocurrencies.

The US Fed meeting begins March 19, 2024. While the market isnt expecting any changes or surprises in terms of rate adjustments, all attention remains focused on the Federal Open Market Committees (FOMC) decision on interest rates.

Rajagopal Menon, the vice president of WazirX, states that Bitcoins price is expected to fluctuate within the range of $62,700 to $68,900 for the next few days or even weeks, potentially extending into April, a period spanning more than three weeks.

Menon anticipates another surge in the near future as demand for Bitcoin increases and its supply diminishes due to the upcoming Bitcoin Halving event, which is likely to drive prices higher. Many analysts share a bullish sentiment during this time and advise investors to remain calm and consider buying during dips.

Read more: Bitcoin Price Prediction: Can Bitcoin Reach $1,000,000 by 2025?

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Predicting the exact trajectory of Bitcoins price, including whether it will experience a steep fall, is inherently challenging due to the volatility and complexity of cryptocurrency markets.

The past week witnessed record-breaking inflows in the U.S. Spot Bitcoin ETFs worth $1.05 billion surpassing the previous record of $678.67 million. Given the substantial influx of capital, it appears that demand-side forces will drive Bitcoin prices higher. The recent rise in Bitcoins price may indeed attract new investors who previously missed the opportunity to buy at lower prices. This FOMO or fear-of-missing-out effect can drive further demand and contribute to upward price momentum in the short term.

Furthermore, the forthcoming Bitcoin Halving event, which will decrease mining rewards, will also create supply-side pressures conducive to bullish price action.

Edul Patel, chief executive officer and co-founder of Mudrex, believes amidst the correction in the cryptocurrency market, now is an opportune time to accumulate and systematically invest to mitigate risk and maximize long-term profits. Bitcoins immediate support level is at $61,500, with resistance at $68,500.

The Relative Strength Index (RSI), a technical analysis tool, indicates that Bitcoin is nearing oversold conditions. Typically, an oversold condition precedes a trend reversal, making it a favorable time to enter the market, says Patel.

While Bitcoins price may experience periods of volatility and speculative bubbles, the long-term sustainability of its value depends on various factors, including regulatory clarity, adoption as a store of value or medium of exchange, technological advancements, and market demand.

Historically, crypto assets have experienced significant drawdowns of 20% to 30% during bull runs before resuming their upward trajectory. Although there may be occasional instances of profit-taking leading to price dips, the overall momentum behind Bitcoin remains bullish.

Chaturvedi advises traders to exercise caution with leverage, as volatile price movements in either direction can lead to liquidations. The upcoming halving of miner rewards scheduled for April 20 is expected to trigger a substantial supply shock, potentially impacting Bitcoin prices significantly.

There is a commonly recorded phenomena in the cryptocurrency market, that is, when the price of Bitcoin experiences significant increases, it often leads to a broader surge in the prices of other cryptocurrencies, including Ethereum and various altcoins. Following are the reasons for this trend:

Market Sentiment: Positive sentiment towards Bitcoin can spill over to other cryptocurrencies, as investors view the entire market favorably during bullish periods. The belief that Bitcoins rise reflects growing interest and confidence in cryptocurrencies as a whole can lead investors to diversify their holdings into alternative assets within the crypto space.

Market Dynamics: Cryptocurrency markets are interconnected, with many investors and traders holding diversified portfolios of digital assets. When Bitcoins price rises, it can lead to increased trading activity and investment inflows into other cryptocurrencies, driving their prices higher as well.

FOMO Effect: Fear of missing out (FOMO) plays a significant role in investor behavior in the cryptocurrency market. As Bitcoins price climbs and garners media attention, investors who may have missed the initial opportunity to invest in Bitcoin may look to alternative cryptocurrencies that appear to offer similar potential for gains.

Technological Synergies: Many cryptocurrencies, including Ethereum, serve different purposes and have unique features compared to Bitcoin. Investors may see value in these alternative cryptocurrencies based on their technological innovations, use cases, or community support, leading to increased demand and higher prices. Speculative Trading: Cryptocurrency markets are known for their speculative nature, with investors seeking opportunities to profit from short-term price movements. When Bitcoins price rises sharply, traders may look for alternative cryptocurrencies with lower prices or perceived growth potential, driving up their prices through speculative trading activity.

Read More: Best Crypto App in India

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Cryptocurrencies like Bitcoin operate in a relatively unregulated environment compared to traditional financial assets. Regulatory uncertainty can create fear among investors, as they may be concerned about the potential for regulatory crackdowns or adverse legal developments that could impact their investments.

While favorable sentiment and the fear of missing out may drive short-term demand for Bitcoin and other companies, concerns about regulatory uncertainty and the sustainability of its value may impact its long-term trajectory.

The eventual adoption of regulations for cryptocurrencies could bring stability and legitimacy to the market. Clear regulatory frameworks may alleviate investors fears of potential losses and foster greater trust and confidence in the cryptocurrency ecosystem.

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Bitcoin Dips To $64k After Record High Forbes Advisor INDIA - Forbes

Hong Kong cryptocurrency investors realised gains of US$250 million last year, according to Chainalysis. In 2021, they made US$1.3 billion.

Overall, cryptocurrency investors around the world recorded total gains of US$37.6 billion in 2023, down from the US$159.7 billion during the 2021 bull market, according to Chainalysis.

Still, last years gains represent a significant recovery from 2022, which saw losses reach US$127.1 billion.

In both 2021 and 2023, US cryptocurrency investors realised the biggest gains in the industry, according to Chainalysis, when they made US$47 billion and US$9 billion, respectively.

The gains pulled off last year by mainland investors showed how the nations community of cryptocurrency enthusiasts has continued to thrive, despite Beijings rigid stance against all activities related to the virtual asset.

Chinas back-door cryptocurrency traders look more important than ever to Binances future

Chinese social media all agog as bitcoin prices continue to surge

If these trends continue, we may see gains more in line with those we saw in 2021, Chainalysis said. As of March 13, bitcoin is up 65.4 per cent and ether is up 70.2 per cent.

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Chinas cryptocurrency investors made gains of US$1 billion in 2023 - South China Morning Post

Illustration : Toya Sarno Jordan ( Reuters )

Bitcoin dropped over 7% on Tuesday, which may be its biggest single-day decline in two weeks. On Tuesday (Mar. 19) morning, the top cryptocurrency was trading at $63,000, down from a high of $73,000 earlier this month.

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The Bitcoin price dropped following a decline in spot ETFs yesterday. The net inflow of Grayscale has decreased significantly in the last few days, while the outflows have reached a record high of over $640 million.

The decline spread across the crypto market, with Ether the second largest cryptocurrency by market cap falling by over 8% from Monday to Tuesday to trade around $3,200. Ether competitor Solana, which gained popularity earlier this year among the blockchain community, fell over 13% in the same time period and is currently hovering at $180. Popular favorite Dogecoin also saw a double-digit decline, trading at $0.13.

Despite the fall, crypto experts are calling bitcoins drop a mere price correction, common in the volatile crypto market. The bullish sentiment for Bitcoin is prevalent, they say, waiting before a big surge.

The U.S. Securities and Exchange Commissions approval of spot bitcoin ETFs has bolstered the sentiment in the bitcoin and crypto market, which is expected to continue for some time. Plus, Bitcoins upcoming halving event, where the reward for mining its transactions is cut in half, is expected to push the top cryptocurrency to new heights.

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Bitcoin price falls $63,000 but a 'halving' event could send it back up - Quartz

After months of bear signals, Bitcoin, along with the broader digital asset market, is once again on the rise. In mid-March, the cryptocurrency had more than tripled on a year-over-year basis to trade at an all-time high of $73,835.

But amidst the excitement, retail traders and institutions are eyeing an upcoming key event that can further impact the digital currency's value: The Bitcoin halving in April 2024.

The first and most widely recognized cryptocurrency, Bitcoin (BTC) has a unique feature coded into its protocol called "halving" an event where the reward for mining bitcoins is reduced by half.

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In the Bitcoin network, miners use a Proof-of-Work (PoW) system to validate transaction information. Miners compete to solve a block's cryptographic puzzle, which requires significant computational power.

After successfully solving a puzzle, miners will propose a new block of transactions to be added to the blockchain, or the decentralized, public ledger that records transactions. As a result of their computational effort to validate transactions, the miners get rewarded for their work.

When Bitcoin was first launched in 2009, miners were rewarded with 50 BTC for every mined block. Every time the network mines 210,000 blocks, which takes roughly four years, the halving cuts the block reward by 50%.

Since the system is designed to have a finite supply of 21 million BTC, the halving ensures the controlled release of new bitcoins until all are in circulation.

There are 32 halvings in total, with the last one predicted to happen around the year 2140.

The first Bitcoin halving occurred in 2012, reducing the block reward from 50 to 25 BTC. This was followed in 2016, then in 2020, cutting the reward down to 12.5 and then to 6.25 BTC. This leaves 29 more halvings, with the next one slated for April 2024.

It's difficult to pinpoint the exact date of the upcoming halving because it's dependent those 210,000 blocks being mined. However, it's projected to occur around April 2024, and this event will lower the reward to 3.125 BTC per block. Following the four-year interval, this will be succeeded by another halving in 2028, then another in 2032, and so on until the final bitcoin is mined.

By then, miners will earn only the fees for verifying transactions paid by network users. These incentives will motivate the miners to continue sustaining the network.

Historically, Bitcoin halvings have been associated with significant price increases in the cryptocurrency. The theory behind this is simple: As the supply of new bitcoins entering the market decreases, the demand for them could surpass the supply.

There are currently around 19.65 million bitcoins in circulation, leaving approximately 1.35 million left to be mined. With fewer bitcoins available, their value increases, making them more attractive to investors.

However, it's important to note that other factors also contribute to this price increase. For instance, halvings usually attract more press coverage. With increased public attention comes heightened speculation and market activity, which can drive up Bitcoin's value. Regulatory changes such as the recent approval of spot bitcoin ETFs, increases in use cases, and global economic conditions may also influence its price.

Besides Bitcoin's value, halvings may also affect miners. As block rewards decrease, miners may become less profitable, especially those with less efficient hardware or higher energy costs. Some may even be forced to shut down operations, leading to a temporary decline in the network hash rate.

But the Bitcoin network is also designed to counter these potential effects. The mining difficulty adjusts every 2,016 blocks (around every two weeks) to maintain a consistent block production rate of around 10 minutes per block. Even as miner participation fluctuates, this mechanism ensures that blocks are consistently mined, maintaining network stability and sustainability of the Bitcoin ecosystem.

While past performance suggests a connection between halvings and Bitcoin's price appreciation, there's no way of accurately predicting the outcomes of future halvings. Investors should always conduct thorough research and approach halving events cautiously, taking into account both the cryptocurrency's volatility and broader market conditions.

Originally posted here:
What Is Bitcoin Halving and Why Is It Important? - Kiplinger's Personal Finance

Last updated: February 19, 2024 03:37 EST | 3 min read

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Solana (SOL) Surpasses Binance Coin (BNB) As Fourth Largest Cryptocurrency Algotech (ALGT) Projects Amazing ... - Cryptonews