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As the cryptocurrency market adjusts to the latest Bitcoin halving, analysts from Bitfinex forecast a price consolidation period of up to two months, with significant price fluctuations expected within this timeframe.
Potential for Extended Consolidation Period in Bitcoin Market
Bitcoin halving is expected to impact cryptocurrency prices favorably, but analysts predict unpredictable price consolidation in the short term, as per Cointelegraph.
According to researchers at the Bitfinex cryptocurrency exchange, Bitcoin may face up to two months of price consolidation following the halving.
The most recent Bitfinex Alpha market analysis suggested that Bitcoin (BTC) could remain the price action benchmark for the crypto market in May and the leading indicator of total cryptocurrency market capitalization.
The research noted that the macroeconomic situation is more resilient than in recent years, with the possibility of rate decreases remaining low in the immediate term.
Furthermore, the analysts stated that general consumers and businesses are "better prepared and informed" about the status of the underlying economy than in previous crypto market cycles.
"Consequently, we believe we could see a 1-2 month consolidation in Bitcoin prices, trading in a range with swings of $10,000 on either side,” they said.
According to the research, any positive influence on Bitcoin's price following the halving, which limited the supply of new BTC to the market, will occur in the coming months.
The analysts noted in their report that "at this point, the economy is also expected to be performing better, having achieved a soft landing and avoiding a recession, providing further impetus to crypto assets."
Impact of Macroeconomic Factors on Bitcoin
Several cryptocurrency speculators have expressed similar sentiments about Bitcoin's recent retracement from its all-time highs over a month ago.
Michaël van de Poppe, founder of MNTrading, thinks that Bitcoin's popularity may have peaked as traders shift liquidity to altcoins. Crypto trader Matthew Hyland agreed, pointing out that Bitcoin's market dominance is losing significant support.
The Bitfinex Alpha study also delves into the technical aspects of Bitcoin's declining market dominance. It observes that Bitcoin halvings have typically shifted focus to altcoins, which rally and gain market share.
“This shift occurs as Bitcoin’s reduced supply growth rate is seen as a long-term bullish development, which increases investor risk appetite, leading investors to seek potentially higher returns from alternative cryptocurrencies,” the report stated.
Ether's current market performance has seen it beat Bitcoin in terms of gains for two weeks in a row, a statistic not seen since February 2023. According to Bitfinex experts, the 7.5% increase in the ETH/BTC measure represents ETH's largest weekly gain versus Bitcoin since the beginning of the year.
The paper also emphasizes Ether's long-term significance as a proxy for the altcoin market, establishing it as a historical early mover before other altcoins catch up with market trends.
Checkmate, the chief on-chain analyst at blockchain data startup Glassnode, also discussed Bitcoin's recent consolidation. He explained that a gradual "de-leveraging" of Bitcoin futures has occurred since the cryptocurrency's most recent all-time highs in mid-March.
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