The following is a guest post by Evgeny Filichkin, Investment Advisor at Keytom neobank.
The so-called “'' occurred when Bitcoin broke through the $69,000 level and hit a new all-time high.euphoria zone' — a phase of a market cycle characterized by extreme optimism and speculative frenzy among investors.
Half of April is just around the corner, and all the hype around this time of year only adds to the excitement. This sentiment causes the BTC rate to rise as more investors rush into the market to buy, perpetuating a self-reinforcing cycle of optimism and rising prices.
But what can we expect to happen once this event hits the market? Halvings have historically had a huge impact on investor behavior patterns, but we're already ahead of the curve this year . So how should investors change their strategies amid the current rally? Let's take a closer look.
Halving between 2020 and 2024: How has the Bitcoin landscape changed?
This halving will be the fourth in BTC's history. Since the last event in 2020, Bitcoin has made significant strides towards mainstream adoption, highlighted by significant advances in its regulatory framework and technological infrastructure.
Recent events include the market introduction of Bitcoin ETFs. contributed greatly Taking positive investor sentiment to new heights. These approvals by the US SEC marked an important milestone in Bitcoin's acceptance as a legitimate investment asset. Additionally, the ETF has expanded access to his BTC for new investor segments such as financial advisors and capital market allocators. This broad access leads to large capital inflows.
As Bitcoin continues to gain traction among institutional investors and individual traders, expectations are high for the 2024 halving event and its potential impact on market trends.
How does the timing of new all-time highs affect investors' stance?
Historically, Bitcoin has experienced significant price fluctuations after halving events due to decreasing block rewards. This led to a reduction in the supply of new BTC entering the market. Increased demand and limited availability have amplified Bitcoin's appeal and driven further investment interest.
But for the 2024 halving, it has already differentiated itself with a unique scenario in which Bitcoin reaches an all-time high of $73,000 well before the event itself. This departure from historical patterns suggests that market sentiment is moving ahead of historical patterns, and trends after the April halving could be very different from what has been the case in the past. be.
The old trading adage “buy the rumor, sell the news” may prove appropriate in the context of this year's Bitcoin halving. Driven by anticipation of the event, investors are actively accumulating Bitcoin and are “buying the buzz.” However, once the event has passed, they may take profits instead of allowing the price to rise further, thereby “selling the news.”
Given that market trends this year are occurring faster than in previous cycles, once the halving event passes, BTC price will likely have no room to rise on the news.If investors choose to take profits, there will be a period of price correction and readjustment, reflecting the market's ability to factor in future events and adjust accordingly.
Be careful not to succumb to the euphoria zone
Investors need to exercise caution and maintain a balanced approach to Bitcoin investing, especially during times of excitement such as the current one. While it's natural to get excited about the potential for big profits, the euphoria zone is also characterized by increased volatility. Many investors may be overlooking the fundamental drivers of Bitcoin's value and instead focus only on short-term price increases, which can lead to unsustainable market dynamics. there is.
Price corrections, on the other hand, are a natural and necessary part of any asset's upward trajectory for a variety of reasons. Rapid and sustained increases in prices can lead to overvaluation, where the price of an asset exceeds its intrinsic value. This could create and further fuel a speculative bubble. Investor enthusiasm More than anything. Price corrections help deflate such bubbles, returning the asset's price to its true value and restoring market equilibrium.
It's difficult to say with certainty when this fix will occur. Traders must remember that markets generally do not have fixed peaks or troughs. Just because asset prices have already reached their highest point doesn't necessarily mean they have to fall again. And the opposite is also true. This highlights the unpredictability of the market and the need for caution in trading decisions.
As investors navigate the opportunities and uncertainties posed by the 2024 halving, a proper understanding of market dynamics and risk management strategies is essential to maximizing potential profits. If you are planning to invest in BTC, please ensure that you are doing so for the right reasons, having properly considered the long-term viability of BTC and the associated risk factors.
