Coinbase has warned that the time of year could pose challenges for an upward momentum as traders await a price surge ahead of Bitcoin (BTC) halving.
In its market commentary report released on April 5, Coinbase emphasized the need for the crypto market to find alternative narratives to propel prices higher.
The Bitcoin halving, scheduled for around April 20 or 21, has often been considered a catalyst for price increases.
However, Coinbase highlights the historical weakness of crypto markets and other risk assets during this time of year.
Data from digital assets research firm Brave New Coin reveals that, since 2011, Bitcoin has experienced average monthly returns of approximately 2.7% from June to September.
In contrast, the remaining eight months have seen an average return of around 19.3%.
Crypto Volumes Continue to Slow Down
Coinbase also noted that crypto volumes have been slowing down as the market searches for the next driving force.
Over the past 24 hours, total crypto volume stood at $61.78 billion, representing a significant 33.25% decrease from the previous day, according to CoinMarketCap data.
Despite these challenges, Coinbase identified potential signs indicating an influx of new investors into the crypto market.
The exchange suggested that Bitcoin’s growing acceptance as a form of “digital gold” could attract a new subset of investors.
Currently, Bitcoin’s dominance in the overall crypto market stands at 50.6%.
Furthermore, Coinbase predicts that dips in prices may be more aggressively bought compared to previous cycles, even as volatility persists during price discovery.
As more investors enter the market, the troughs in price declines could become shallower.
Halving events have historically been associated with surges in Bitcoin’s price.
Following the previous halving event in May 2020, Bitcoin experienced a remarkable rally.
Starting at $8,787 during the halving, the cryptocurrency soared to nearly $69,000 by November 2021.
Bitcoin ETF Flows Expected to Remain Strong
In a recent analysis, on-chain analytics firm Santiment said spot Bitcoin exchange-traded fund (ETF) flows are anticipated to remain robust leading up to the Bitcoin halving.
The company noted that Bitcoin ETF volume has not slowed down since the asset’s mid-March all-time high.
Santiment said that trader activity continues to be higher than the turning point in late February when individual trading surged.
“It is a likely foregone conclusion that high activity should continue leading up to the April 19th halving, but it will be interesting to see whether a drop-off in ETF volume and on-chain volume will occur directly afterwards.”
📊 #Bitcoin #ETF volume hasn’t slowed down four weeks after the $BTC #AllTimeHigh. Among $GBTC, $IBIT, $FBTC, $ARKB, $BTCO, $BITB, and $HODL, trader activity is still notably higher than the turning point that began in late February after an influx of individual trading began… pic.twitter.com/LErr5T8BWF
— Santiment (@santimentfeed) April 7, 2024
Santiment reported that the top seven ETFs have seen a daily volume of $3.19 billion.
However, the firm expressed interest in observing whether there would be a decline in ETF volume and on-chain volume immediately after the halving event.
Meanwhile, Matteo Greco, a research analyst at digital asset firm Fineqia International, expects Bitcoin to reach $75,000 by the halving event.
“Historically, BTC halving events have marked significant points followed by 9-18 months of uptrend, culminating in cycle peaks,” he wrote in a recent note.