This week, Bitcoin performed mediocrely in the cryptocurrency market. The crypto community, with an accuracy rate of 84.46%, expects Bitcoin to fall. Can the positive market of Bitcoin's "halving" be realized?

Bitcoin fever cools down again

Bitcoin has had a lackluster week on the cryptocurrency market, down about 2.2% over the past seven days. Monday’s 3% drop set the stage for a tepid weekly trend, as less-hawkish comments from the Federal Reserve failed to support risk sentiment.

Currently, Bitcoin price is below the $30,000 to $31,000 channel favored during much of July, indicating a decline in optimism in the crypto market.

From the indicator point of view, the Bitcoin Fear and Greed Index is currently in the neutral zone, but it has fluctuated in the greed zone for most of the month. After the market digested the news that BlackRock launched a spot Bitcoin ETF, the bullish sentiment of Bitcoin seemed to have temporarily subsided.

Negative factors accumulate

The Bank of Japan announced a minor adjustment to its yield curve control (YCC) program, allowing the yield of Japan's 10-year government bonds to fluctuate around 0.5%. After the Bank of Japan's decision, bond yields rose, providing a negative signal for risk assets including Bitcoin. Since 2016, the Bank of Japan's YCC has been a major source of liquidity in global markets. Abandoning the policy of increasing liquidity could have global implications, which in turn could affect risk assets such as Bitcoin.

From a technical perspective, Bitcoin could fall below its current support level. FxEmpire analyst Alexander Kuptsikevich wrote that the cryptocurrency market cap fell 0.9% to $1.176 trillion in the past 24 hours. The cryptocurrency market cap has been on a downward trend since mid-July.

On Wednesday, Bitcoin attempted to rise from its 50-day moving average, but fell back to just above $29,100 per coin on Thursday, which is the 61.8% Fibonacci retracement level of the rally since the June low, and currently provides support for Bitcoin price action. A break below this support level will open a direct path to the 200-week moving average ($27,000 per coin), or even lower, to the 200-day moving average ($26,400 per coin).

As Bitcoin continues to consolidate below the psychologically important $30,000 level, cryptocurrency community CoinMarketCap is also bearish, predicting that the prices of major decentralized finance (DeFi) assets will fall further in the coming weeks.

Finbold, a British financial media outlet, wrote that a vote by 3,564 members of the cryptocurrency market analysis platform indicated that the community expects Bitcoin to fall to an average price of $27,315 per coin on August 31. In fact, if the CoinMarketCap community's estimate for the end of next month comes true, it means that Bitcoin will fall 6.47% or $1,890 per coin from its current price, which is about $29,205 per coin. It is worth noting that the average historical accuracy of this crypto community's predictions for Bitcoin over the past six months currently stands at 84.46%.

Can the “halving” market come as expected?

The Motley Fool, a well-known financial information website in the United States, said that this year's situation shows that the winter of cryptocurrencies is passing as the overall market value of digital assets has climbed by about 50%. Bitcoin has performed much better. So far in 2023, it has risen by 77%, even exceeding the increase of the Nasdaq Composite Index, which is dominated by technology stocks.

However, despite Bitcoin’s impressive momentum, it is still 57% below its peak price of nearly $69,000 reached in November 2021. This could present a potential opportunity for the market.

The website states that the US CPI has shown signs of slowing down in the past few months. Investors may predict that the Federal Reserve will eventually cut interest rates again in the near future. Perhaps it is in anticipation of this that Bitcoin has soared in 2023.

In addition to the macroeconomic backdrop that may be more favorable for risk assets, another catalyst is the Bitcoin halving, when the reward for miners will be cut in half, which will affect the supply of new Bitcoins. Bitcoin prices usually rise in the months before and after the event. The next halving is expected to occur in April 2024, about nine months from today.

In addition, the most obvious long-term catalyst is the acceptance of Bitcoin by more institutions. Companies including BlackRock are applying to the SEC to launch a Bitcoin ETF, although the SEC has rejected the application. With so many large fund management companies that collectively control trillions of assets promoting this financial product, it is clear that investors have a great demand for Bitcoin.

However, The Motley Fool also warned that while these catalysts could push Bitcoin prices to all-time highs in the next few years, the path will be volatile.

There are other analysts who take the opposite stance on the impact of the "halving". Veteran crypto trader Peter Brandt believes that the much-anticipated approval of the Bitcoin ETF and the upcoming Bitcoin halving are not a big deal. Brandt emphasized that the market will naturally predict and discount future events, and the chain reaction of Bitcoin halving and potential Bitcoin ETFs has already emerged. He insists that Bitcoin's position at the top of the food chain is the only thing that really matters, and believes that the correlation of the asset with other markets is impossible to achieve.

Cryptocurrencies other than Bitcoin were mixed. Ethereum, the second-largest cryptocurrency, was essentially flat so far in July. Smaller tokens, or altcoins, showed mixed performances, with Rachel Lin, CEO of trading platform SynFutures, saying: "Unlike the previous crash where altcoins suffered greater losses than Bitcoin, this time they have stood firm with the support of Ethereum and other major altcoins."

(The above views are from Barron's, FxEmpire, Proactive, UToday, The Motley Fool, for reference only)