Recently, Binance founder and CEO Changpeng Zhao (CZ) posted a timeline on Twitter, which attracted millions of views and heated discussions. He seemed to be hinting to investors that the turning point from the bear market to the bull market is coming soon.
"4-year cycle," Zhao Changpeng wrote on Twitter, with a chart showing the Bitcoin halving schedule, which is only 166 days away. To curb Bitcoin price inflation, the Bitcoin network's block rewards are halved approximately every four years, and the next halving is expected to occur in April 2024. By then, Bitcoin production will decrease, and mining rewards will drop from 6.25 Bitcoins to 3.125 Bitcoins.
According to historical trends, the year after the halving is usually a "bull market year". Although no one can accurately predict the market trend, the halving event has been generally regarded as a bullish signal. In October, Zhao Changpeng shared his experience of witnessing three halving events in the past. He pointed out that in the months before the Bitcoin halving, the market will begin to see more and more rumors, news, anxiety and hype, but he also warned that this does not mean that Bitcoin will double overnight after the halving. It is more reasonable to gradually climb upwards in the next year and break through historical highs many times.
It is worth mentioning that MicroStrategy purchased 155 bitcoins in October at a price of $5.3 million. Its CEO Michael Saylor revealed that now is an ideal entry point for Bitcoin and suggested that the investment layout be extended to 1-4 years to wait for a good harvest.
Saylor said: "The natural sellers of most Bitcoin in the market right now are Bitcoin miners, who have to sell Bitcoin to pay for electricity and capital costs and repay debts, with sales to the market valued at about $1 billion per month. The agreement mandates that they be cut in half starting in April 2024 or the end of that month."
Considering the impact of halving on sales and demand, Saylor said: “So you’re going to see $12 billion a year in organic sales turn into $6 billion a year in organic sales. At the same time, products like the Bitcoin spot ETF increase demand for Bitcoin. That’s why all of us are quite optimistic about the next 12 months. Demand will increase, and supply will shrink, which is unprecedented in the history of Wall Street.”
Bitcoin recently approached the $36,000 mark, although it reversed and adjusted to $34,250. But after rising nearly 30% in the past month, it is normal for prices to cool down as some traders take profits and market participants evaluate whether the catalysts for the rise are still valid.
However, some analysts are still optimistic about Bitcoin, and the market expects that if the price of Bitcoin successfully breaks through the $36,300 level, there will be another "gamma squeeze". It is understood that gamma is an indicator in option trading, which indicates the sensitivity of option prices to changes in the price of the underlying asset, and also measures the speed at which hedge positions need to be adjusted. Gamma squeeze refers to the phenomenon that due to the accumulation of gamma risks in option trading, market makers or option holders need to continuously buy or sell the underlying asset, thereby pushing up the price of the underlying asset.
Alex Thorn (@intangiblecoins), head of research at Galaxy Research, analyzed that as the spot price of BTC rises, more and more Bitcoin options market makers are shorting gamma. Therefore, in the short term, due to gamma squeeze, the price of Bitcoin is likely to rise and it is difficult to fall sharply.
However, whether the gamma squeeze will happen again is a moot point. Traders’ gamma exposure last week was probably the spark that set off the powder keg – the powder keg being liquidations, leveraged long demand and spot chasing. It is important to recognize that positions in the perpetual futures market (liquidations), natural spot demand and any potential events (DTCC stuff last week) must also be present to see something explosive like a 10% move in a single day.
Summarize
There are differences in the current market about the trend of Bitcoin prices, but there is also some consensus, that is, it is still unknown whether the short-term Bitcoin price has peaked, and the long-term price trend is more optimistic, which is affected by many factors, including market supply and demand, investor sentiment, global economic dynamics, etc. It should be noted that the market of digital currencies such as Bitcoin is highly volatile, and investors should have sufficient risk awareness and risk management capabilities, be cautious about various rumors, hype and emotional influences in the market, take the initiative to understand the market situation, and make reasonable decisions based on their own risk tolerance and investment goals.
