CNBNews

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Just a couple of weeks ago, Bitcoin market sentiment was buzzing as the much-anticipated halving process was expected to lead to huge gains — as it had in the past. However, this time around, those gains never materialized and the price of Bitcoin has mostly flattened out and actually lost value ever since. 

Now, with the world’s most valuable cryptocurrency struggling, there has been a rush of liquidations that have many investors spooked. Despite this, it isn’t all doom and gloom as many analysts believe there is a period of relative stability ahead. 

Since Bitcoin first took the financial world by storm and disrupted global markets everywhere, the mad rush for other cryptocurrencies has led to a true crypto revolution. Fast forward to today and popular uses of cryptocurrencies have grown enormously. 

For example, online casinos that accept cryptocurrencies are extremely popular now. These so-called crypto casinos, like megadice.com, offer very generous bonuses and other benefits to players, who can now use Bitcoin as their main payment method. Given the ease of access and convenience this provides, stability in the market matters to cryptocurrency holders far beyond those who solely own them for investment purposes. 

Run on blockchain technology that makes cryptocurrency relatively secure, provides a degree of anonymity, and higher degrees of immutability over transactions than banks could ever offer, cryptocurrencies are certainly here to stay. With more than 20,000 in existence now, and new ones being created every day, it’s clear that the financial market will never be the same no matter how many detractors the concept has. 

However, given the vast amounts of investments now tied into major cryptos like Bitcoin, any volatility in the market is bound to easily spook ordinary investors. Ever since its first major bull run, Bitcoin has become synonymous with turning ordinary people into millionaires. However, in the same vein, its volatility, and the volatility of crypto markets in general are well known too. 

Over the years, Bitcoin has reached some epic highs, and then famously also experienced moments where its value has plummeted. Despite this, in the last year, it has seen the kind of bullish runs that have led to a modern-day gold rush all over again. For example, in March 2024, Bitcoin soared to a value of $73,000. 

The timing of that run could not have been more welcome, since investors knew it was due for another halving less than a month later. Previously, the halving process had always resulted in the crypto immediately experiencing large gains, and it was expected to do the same again. 

For those unfamiliar with the concept, Bitcoin’s halving is a function built into its code to ensure its production is always kept within acceptable levels. As such, Bitcoin production will cease completely once there are 21 million coins mined. 

Both as a means of limiting supply and guaranteeing its value, the halving process is key to ensuring Bitcoin is never overproduced or mined excessively, or to the detriment of its holders. Every time a halving cycle is completed, mining of Bitcoin is essentially cut down drastically, until the supply slows down and production is halved. 

This year’s halving process was expected to lead to large short-term gains. Instead, the value of Bitcoin flattened and has now even begun trending downward. According to the news lead for Bitcoin.com, Jamie Redman, far from what the market expected, by 9 May 2024, BTC had seen a 1.9% decline in 24 hours, with a 12.4% decrease in the past month. 

The effect of this has led to massive sell-offs, effectively resulting in $134 million in liquidations across the entire crypto market. While crypto trading is subject to its own esoteric factors that lead to such things, in the broader sense, that amount of activity is enough to create a degree of instability in the market. 

Whether you’re an institutional investor, or a smaller one, use your crypto holdings for long-term gains, or simply to play slots at your favorite Bitcoin casino, stability is always welcome as it provides certainty over the value of your holdings. Fortunately, while things may look bleak at the moment, many analysts aren’t too concerned, since other factors point toward long-term stability. 

In that sense, short-term liquidations may simply be a symptom of market fear. However, other analysts note that Bitcoin’s volatility risk premium (VRP), which is an indicator of its volatility, has recently been slashed. As a result, most analysts believe this indicates that a period of longer-term stability lies up ahead, despite how volatile things may seem in the short term. 

The upside of this is that even though the market hasn’t experienced huge gains since the halving, what can now be counted on is a period of relative flattening that will have the overall effect of attracting more investment in the long term. For those investors who aren’t spooked into liquidating at the moment, their patience may well be rewarded in a major way down the road. Time will tell!