By David Wagner
Investing.com – As a Bitcoin ETF in the US finally becomes a reality this week, some believe Bitcoin will set new records soon, while others predict that investors will ‘sell the fact’ after they ‘buy the rumor “.
Indeed, it would not be the first time that Bitcoin has risen in anticipation of a major event, only to start falling as soon as this event becomes reality. This was the case with the launch of CME Bitcoin futures in 2017, and more recently with the IPO of Coinbase (NASDAQ: NASDAQ: COIN) earlier this year.
The question for cautious investors, then, is how much Bitcoin could correct if history repeats itself.
Bitcoin should show a less severe correction this time around
In this regard, one can note the recent very insightful comments of the Pantera Capital fund, via its CEO Dan Morehead, in a report published earlier this month.
He notably recalled that during the first two major phases of Bitcoin’s correction in 2013-15 and 2017-18, bitcoin plunged by more than 80% after new highs.
However, he also pointed out that the corrections following the 2019-20 and 2020-2021 highs were much less severe, by -61% and -54%, respectively.
Therefore, we can expect that if Bitcoin enters a bearish market after the launch of a Bitcoin ETF in the United States, losses are unlikely to exceed 50%. That would bring the digital coin down to close to $ 30,000, however.
“I have been advocating for a long time that as the market becomes bigger, more valuable and more institutional, the magnitude of price fluctuations will subside,” he explained to justify the increasingly bear markets. shallow Bitcoins.
Bitcoin rallies will also be less and less massive
However, Morehead pointed out that the flip side is that the cryptocurrency’s bullish rallies will also be smaller and smaller, noting that the bullish impact of the different halves that have taken place over the history of Bitcoin resulted in smaller and smaller rallies.
According to him, the first halving of Bitcoin resulted in a 9,212% increase in cryptocurrency, while the second resulted in a 2,910% increase. The third, which took place last year in May 2020, has so far resulted in a rally of “only” 720%.
Halving reduces the reward for Bitcoin miners by about half every four years, which equates to a reduction in supply, with a mechanically bullish impact on the price of Bitcoin.
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