Bitcoin is on pace for its worst month since November 2022. Here’s what’s driving the decline.
Bitcoin is on pace for its worst month in nearly a year and a half — despite the cryptocurrency’s so-called halving event on April 19, which some crypto bulls had hoped would provide a fresh catalyst for a rally.
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The largest crypto token BTCUSD is down 14.4% in April to date, and on pace for its worst monthly performance since November 2022, when it fell 16.1%, according to Dow Jones Market Data. Bitcoin was trading slightly above $60,000 on Tuesday, off more than 18% from its record high of $73,798 reached in March.
“One likely reason for the current malaise we’re seeing is the heavy rally we saw ahead of the halving event,” according to James Harte, analyst at brokerage firm Tickmill Group. As a mechanism written in bitcoin’s algorithm to control its supply, halving happens every 210,000 blocks that are mined on the Bitcoin blockchain, or roughly every four years.
During each halving, the rewards that miners in the form of bitcoin tokens are cut in half. With the most recent halving, the reward for miners dropped to 3.125 bitcoins, from 6.25 previously, for verifying a block of transactions.
Still, bitcoin’s recent decline is not unexpected, according to Harte. Based on historical data, bitcoin prices usually move lower in the three months post-halving, while tending to reach fresh highs over the 12 months following the event, Harte wrote in a Tuesday note. “With that in mind, the current consolidation and correction in BTC might last longer and push a little deeper before upside resumes,” Harte said.
To be sure, Bitcoin has only undergone three halvings prior to this year, and its past performance is not indicative of future results.
The crypto’s recent downturn could also be attributed to increased profit-taking by investors who entered the crypto market during its previous downturn in 2022 and 2023, as well as by bitcoin ETF investors who chose to capitalize on the recent run-up, said Matteo Greco, research analyst at digital-asset and fintech investment firm Fineqia International, in a recent note.
Ether ETHUSD, the second-largest cryptocurrency, is also down considerably this month — having lost 17.6% in April to date and on pace for its worst month since June 2022, when it fell 48.1%.
