By David Wagner
Investing.com — As a Bitcoin ETF in the USA will lastly change into a actuality this week, some imagine that Bitcoin will quickly set new data, whereas others predict that traders will “promote the actual fact” after having “purchased the rumor.”
Certainly, it could not be the primary time that Bitcoin has risen in anticipation of a significant occasion, solely to start out falling as quickly as that occasion turns into a actuality. This was the case with the launch of CME Bitcoin futures in 2017, and extra lately, with the Coinbase (NASDAQ:NASDAQ:COIN) IPO earlier this yr.
So the query for cautious traders is how a lot Bitcoin may right if historical past repeats itself.
Bitcoin is predicted to submit a much less extreme correction this time
On this regard, we will word current very related feedback from the fund Pantera Capital, by way of its CEO Dan Morehead, in a report printed earlier this month.
Specifically, he recalled that in the course of the first two main correction phases of Bitcoin in 2013-15 and 2017-18, bitcoin plunged by greater than 80% after new highs.
Nevertheless, he additionally identified that the corrections following the 2019-20 and 2020-2021 highs had been a lot much less extreme, by -61% and -54%, respectively.
Due to this fact, we will anticipate that if Bitcoin enters a bear market following the launch of a Bitcoin ETF within the U.S., the losses will seemingly not exceed 50%. That might, nevertheless, convey the digital coin again near $30,000.
“I’ve lengthy advocated that because the market turns into bigger, extra beneficial, and extra institutional, the magnitude of worth fluctuations will reasonable,” he defined to justify Bitcoins more and more shallow bear markets.
Bitcoin rallies will probably be much less and fewer huge as nicely
Nevertheless, Morehead identified that the flip facet of the coin is that the cryptocurrency’s bullish rallies can even be smaller and smaller, declaring that the bullish influence of the varied halves which have taken place over Bitcoin’s historical past have resulted in smaller and smaller rallies.
Based on him, the primary halving of Bitcoin led to a 9212% rise within the cryptocurrency, whereas the second resulted in a 2910% rise. The third, which came about final yr in Could 2020, has up to now resulted in a rally of “solely” 720%.
Halving reduces the reward for Bitcoin miners by about half each 4 years, which is equal to a discount in provide, with a mechanically bullish influence on the Bitcoin worth.