Bitcoin Faces Correction Risks Ahead of Halving, Experts Warn

In March, a sell-off in Bitcoin may occur ahead of the halving. This conclusion was reached by analysts at Matrixport.

According to the experts’ calculations, the average return of digital gold in years when miner rewards are halved (2012, 2016, and 2020) is 17%. This supports their target of $50,000 for January 2024: $42,265 on December 31 + 17%.

Subsequently, experts anticipate a reversal and a 14% correction to $36,350.

“That’s why we are concerned about an early fake rally,” they admitted.

Below is the averaged monthly Bitcoin performance during halving years.  

Specialists reported that one of their indicators turned bearish for the first time since August 2023. It warned of a 7% decline over the next two weeks. This signal indicates the risks of a failed breakout attempt, which could lead to a rapid price reversal, analysts explained.

Experts noted insufficient hedging by traders—the implied volatility for a contract expiring on January 12 with a $40,000 strike increased to 100%. 

According to their calculations, the market expects price fluctuations of 7.8% up or down, anticipating the approval of a spot Bitcoin ETF by the SEC on January 10. In other words, the first cryptocurrency’s rate will range from $40,600 to $47,400 within a week, according to the options market.

Analysts highlighted a drop in the funding rate, recalculated to annual rates, from an “unacceptable” peak of 66% at the beginning of the year to 2–7%. They noted that in 2023, the parameter was 5–10% and jumped to 25% in December before the subsequent rally.

According to the experts, technically, Bitcoin appears vulnerable. They noted that the approval of a spot ETF based on digital gold could lead to profit-taking. Due to reduced leverage, the effect may be limited.

“We remain constructive for 2024. It is worth noting that Bitcoin tends to revisit resistance levels, except for the range of $36,000 to $38,000, which may be retested,” the experts concluded.

Macro strategist Henrik Zeberg has predicted a “fantastic” growth of the crypto market, during which the digital gold rate will reach $150,000. 

Previously, Morgan Creek Digital co-founder Anthony Pompliano warned that the launch of the instrument would not double the price of the first cryptocurrency overnight.