Bitcoin halving is approaching, and the current environment is very different from 2016

At around 12 o'clock this morning, DASH completed its production reduction. As expected, it did not attract much attention from the market, nor did it have any impact on the market. Everyone's current attention is on the Bitcoin halving in half a month.

Although the recent popularity of Bitcoin halving has not reached overwhelming levels, its voices have been heard through various channels, including financial media, senior economic analysts, and various traders. What’s more, some have directly set their expectations for the price of Bitcoin after the halving at $50,000, $200,000, or even $300,000. This morning, there were media reports that the Bitcoin halving will create a large number of millionaires with a net worth of millions of dollars.

We can find that the current market is optimistic about the halving and the reference history is 2017, but in fact the last halving was in 2016. Even if the price increase at that time was due to the halving, the corresponding halving was in 2021, not this year.

Secondly, there are actually many different opinions on the reasons for the market rise, and it is not necessarily caused by halving. After all, there is a one-year interval between halving and market rise. There are too many variables and reasons during this period, and the biggest reason is not necessarily halving.

In fact, halving is simply a change in the supply side, and price changes are inseparable from the joint action of both supply and demand. If we assume that the original demand is just balanced with the supply side, it is unlikely that the demand side far exceeds the supply side before the halving, otherwise the price will rise sharply without halving. So assuming that the demand side and the supply side are balanced at that time, the supply side is halved after the halving, but the simple halving is not enough to increase the price from a few hundred US dollars to a maximum of 20,000 US dollars, so it is bound to be that the demand side has produced a greater change than the halving of the supply side.

This is indeed the case. The growth from 20,000 bitcoins in exchange for a pizza to a few hundred dollars in 2016 is actually enough to shock many people. At that time, the performance of other domestic financial markets, especially the stock market, was not ideal. It was understandable that some investors turned their attention to other financial markets and were attracted by the well-performing Bitcoin. Therefore, most investors flocked into the Bitcoin market.

The most powerful propaganda at the time was the so-called consensus. Whether it was the original intention of entering the Bitcoin market or the overall market atmosphere, the idea that "Bitcoin will become more and more valuable" drove investors and funds to continue to pour into the market. It is not an exaggeration to describe the market at the time as frenzy. After all, the whole process was snowballing.

From a few hundred dollars to a few thousand dollars, and from a few thousand dollars to tens of thousands of dollars. To be frank, no one had ever seen such a scene at that time. The future was unknown but exciting, so they were willing to take risks. Even in their hearts, it was not really a risk but a way of accumulating wealth. But as everyone saw in the end, they got a result similar to a Ponzi scheme, which also caused the reputation of Bitcoin to plummet.

Therefore, the current market environment and everyone’s mentality are far different from those in 2016 and 2017. Now everyone has understood more routines of this market. The entire market is full of speculation. Everyone can no longer support the price of Bitcoin with the mentality of simply rising. "Price increases are for better market crashes, and price declines are for market makers to absorb funds." There are countless investors with similar ideas, and we can no longer reach the simple consensus like in 2017.

Secondly, in terms of the environment, the current Bitcoin market can be said to be facing internal and external troubles. The internal trouble is that the sequelae of the recent drop from over $10,000 to $3,800 has not been eliminated. Many investors have withdrawn from the market in frustration. At present, the market itself is not enough to attract outside popularity, because the outside popularity itself is also in a suppressed environment.

So many people, including us, think that if the trend of Bitcoin and even the cryptocurrency market follows other financial markets, it will attract enough popularity for the cryptocurrency market. But the problem is that this is not up to you and me. This is actually a paradox. To attract outsiders’ popularity, prices need to rise, and price increases require external funds. External funds require more attention from people outside the market. This is actually a vicious circle. Therefore, the key lies in the people who can really make decisions on this situation to break this balance. This is also one of the important reasons why the market is currently building momentum for Bitcoin halving, which is to achieve the goal of attracting popularity.

To sum up, the current cryptocurrency environment and investor mentality are very different from those in 2016, and even the popularity and investor structure are different. We cannot simply assume that halving = price increase. The basis for some voices in the market that say prices are rising cannot stand up to scrutiny, so we should still maintain our ability to distinguish.

Back to the current market, the overall market is still fluctuating around 7700, and the entire market is revealing two words: entanglement. It can also be seen from the current long-short ratio that the dominant side of the long and short positions has been changing.

The trend of the daily line is also very obvious. There is indeed a heavy selling pressure at 7,800, otherwise it would not have been suppressed when approaching 7,800 before the opening of today. If it relied on the rise before the opening, it would not have been a big problem to challenge or touch 7,800. However, it quickly fell to around 7,700. One of the major reasons is the selling pressure near 7,800. Secondly, there is a high probability that it will step back on the 5-day moving average for confirmation before challenging the next 7,800 US dollars.

The 4-hour line shows that the market is quite strong. The divergence trend appeared early, but the price still remained at a high level. It can only be said that the bulls are quite strong and are unwilling to make a decent correction. In fact, if the bulls want a healthy rise, a slight correction will consume the divergence pressure, and the subsequent upward movement will be healthier. Is it possible that while trying to break through 7800 to break the divergence trend, there is no correction to give investors a chance to take the chips? This is also something we should think about.

In short, the market has not broken the balance on either side at this position. We might as well wait for the market to break the balance first. Moreover, the market has been fluctuating for a while. We should be careful about the market makers' manipulation and should wait and see in the near future.