Bitcoin (BTC) Drop $59K: Could a Bitcoin Supply Shock Send Prices Soaring?

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Bitcoin (BTC), the world’s oldest and most valued cryptocurrency, fell below $59,000 over the weekend due to weak buyer activity. However, experts are predicting a significant supply shock that could push prices higher. According to Bitcoin Trader Mister Crypto, a notable supply shock is imminent, mirroring patterns seen after previous halving events.

Bitcoin Supply Shock Coming

A look at Bitcoin’s past performance reveals a clear pattern, after each halving event the price of Bitcoin saw substantial increases due to a heavy demand for Bitcoin amid decreased supply. As Bitcoin’s production rate has been cut in half,  intensifying this supply-demand imbalance.

Currently, Bitcoin ETFs are absorbing the market’s available Bitcoin. This week alone, Bitcoin ETFs recorded nearly $13 million in net inflows, highlighting strong institutional interest.

Factors Contributing to the Supply Shock

Mining Competition: The halving reduces the number of Bitcoins miners receive, pushing less efficient operations out and increasing competition among miners.

Decreased Output: With daily Bitcoin output being cut, and institutional buying on the rise, the supply-demand imbalance is expected to rise. Before the halving, U.S. ETFs’ demand was already higher than daily supply, a disparity that may grow further.

Institutional Demand Surge: Major institutional players, including U.S. ETFs like those managed by BlackRock and Fidelity, are accumulating Bitcoin at a rate far surpassing daily production. With the ETFs in Hong Kong have entered the market, bringing more capital and adding to the growing demand.

Bitcoin Price Analysis

Bitcoin price is currently witnessing a period of relative consolidation hovering near the $58,000 to $60,000 range. This pause in Bitcoin’s price movement has led to speculation about where BTC trends in the short-term

If BTC rises to the 61.8% Fibonacci retracement level at $62,066, it may encounter resistance. This level aligns with a previously breached trendline and the 100-day Exponential Moving Average at around $62,226, creating a key resistance zone.

If BTC fails to break through $62,066, it could drop to $57,115 and potentially fall further by 19% to test the daily support level at $49,917. Perhaps, the Moving Average Convergence Divergence (MACD) indicator supports a bullish trend, suggesting that Bitcoin might continue to climb.