Recent inflow slowdowns in spot Bitcoin exchange-traded funds (ETFs) and high unrealized gains among investors are signals of possible declining Bitcoin prices post-halving. CryptoQuant’s research director, Julio Moreno, points out that these unrealized profits from Bitcoin’s recent surge could prompt investors to sell, applying additional downward pressure on the cryptocurrency‘s value.
Indicator Suggests Sellers Gearing Up
The Net Unrealized Profit and Loss (NUPL) metric provided by CryptoQuant indicates a potential sell-off, with a critical value of 0.7 alerting that investors may be inclined to cash in their gains. Despite recent corrections, the NUPL value edged up, unveiling a readiness among Bitcoin holders to sell at the current value levels. Moreno cautions about a bearish price outlook due to the combination of dwindling ETF Bitcoin purchases and the high potential for profit-taking.
ETF Inflows Hit a Low Amid Market Speculations
On March 14th, Bitcoin ETFs experienced a significant drop in net inflows, marking a considerable 80% decline from earlier sessions. James Butterfill, CoinShares’ Head of Research, suggests that any potential downturn might be less impactful compared to previous market slumps. He explains that the presence of institutional investors, who often balance their portfolios, could actually lead to less volatility rather than exacerbate it.
Anticipating the Impact of Bitcoin’s Halving Event
With the halving event approaching, which slashes the mining reward by half and consequently reduces the rate at which new Bitcoins are generated, there’s a widespread anticipation of its impact on the market. Despite this event traditionally acting as a bullish catalyst, the current scenario suggests a more complex picture, with miner sales and increased production costs factoring in. CoinShares predicts the average cost to mine a Bitcoin post-halving will reach $37,856, with varying effects on miners depending on their operational expenses.
These insights reveal a cautious stance within the Bitcoin community as it approaches a significant event in its lifecycle.