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Recent findings from market research firm Glassnode highlight the important role that financial institutions and “smart money” play in influencing the dynamics of Bitcoin’s price as the cryptocurrency’s halving event approaches.
The historical relevance of Bitcoin price fluctuations is underscored by Glassnode’s study. The coin had significant increases at its prior halving occurrences of 1,000%, 200%, and 600%.
The drop in BTC miners’ compensation is expected to have a substantial influence on supply-demand dynamics and market price as the impending halving, which is scheduled to occur around April 19, draws closer.
While past halvings have typically resulted in market rallies due to decreased supply and heightened demand, Glassnode points out three key factors contributing to potential price volatility this time.
The market behavior of Bitcoin is made more complex by the growing involvement of institutional investors through exchange-traded funds (ETFs). Keeping an eye on ETF inflows and outflows becomes essential for gauging market mood.
Changes in the actions of “smart money” and long-term investors might be indicators of market tops or bottoms. Long-term holders’ increased selling may have an effect on price levels and market stability as a whole.
Investors should be cautious of any “sell-the-news” impacts as the halving event draws closer, as anticipation might result in profit-taking. It is advised to strategically modify trading positions in order to handle the anticipated volatility.
At the time of writing, Bitcoin is trading at $61,148.26, reflecting a 4.05% decrease in the last 24 hours.