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Bitcoin's Pre-Halving Inflection Point

An in-depth analysis of Bitcoin's consolidation phase, looming halving event, and macroeconomic factors shaping investment strategies.

Bitcoin Magazine Pro and Ansel Lindner

Apr 9

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Introduction

In a contracting economic backdrop, Bitcoin is at a pivotal moment before the halving that will exacerbate the supply shortage. Data suggests Bitcoin is in a consolidation phase with shifts in long-term and short-term holder activities. Investors must weigh macro forces against Bitcoin's specifics and sector trends to craft strategies that capitalize on its dual potential as a speculative and hedging asset.

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On-chain metrics

Realized HODL Ratio: Indicates a shift in market dynamics with long-term holders becoming less dominant (-27.76% change).

MVRV Z-Score: Suggests bitcoin is not at an extreme valuation level, with a slight decrease (-3.52%).

Reserve Risk: Shows a minor increase (1.87%), indicating a growing confidence among long-term holders.

90-Days Coin Days Destroyed: A significant rise (22.69%), suggesting increased activity from long-term holders.

STH LTH Costs Basis Ratio: Indicates that short-term holders have a lower cost basis compared to long-term holders (-14.58% change).

Net Unrealized Profit/Loss Ratio: A slight decrease (-3.71%) points to a cooling in market optimism.

Percent Supply in Profit 30-Day MA: A small decrease, hinting at a slight increase in coins not in profit.

Realized Price (Rate of Change): A notable increase (10.13%), indicating movement of coins bought at higher prices.

7-day versus 30-day changes: A notable increase in 90-Days Coin Days Destroyed suggests that long-term holders have been more active recently, potentially indicating profit-taking or portfolio adjustments as the halving approaches, which could lead to increased market volatility. Simultaneously, a decrease in the Short-Term to Long-Term Holders Cost Basis Ratio highlights a growing influence of short-term holders in recent days, possibly increasing the market's price sensitivity. Additionally, a slight uptick in the Net Unrealized Profit/Loss Ratio indicates a minor rise in market optimism or reduced unrealized losses, subtly influencing trading behaviors in the short term.

Investor Insights

Anticipate Increased Volatility: With LTHs becoming more active, as indicated by the recent uptick in 90-Days Coin Days Destroyed, the market might experience heightened volatility. Investors should consider this when planning their investment strategies, especially with the Bitcoin halving on the horizon, which could amplify price fluctuations...

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