Analysts expect Bitcoin to gradually rise as the cryptocurrency's liquidity improves. What can you expect from the coin market?

A week ago, a halving was activated in the network of the main cryptocurrency, during which the reward of miners for mining a Bitcoin block decreased exactly by half. The procedure took place on block number 840,000, and it was also remembered for its record transaction fees. Now the network's performance has returned to relative normality, which is why analysts are asking a different question.. What will the price dynamics of BTC be in the coming months after the halving? Kaiko platform experts tried to formulate an answer to this.

Many cryptocurrency enthusiasts from the world of traditional finance are also betting on the growth of the coin industry. For example, in the first half of April, venture capitalist Tim Draper said that he expects Bitcoin to grow to $250,000 in 2024.

And although such a goal seems too ambitious, Draper also substantiates his own version. According to him, the launch of spot Bitcoin ETFs in January 2024 in the United States became the key to attracting large capital to the coin niche. Moreover, over time, the influx of capital will only increase, which will allow the crypt to reach new historical highs.

Billionaire and Bitcoin investor Tim Draper

This scenario is also supported by the general interest of capital holders in crypto.. For example, in the case of Bitcoin, the number of addresses that have at least a thousand dollars in BTC is growing.. Read more about these statistics in a separate article.

How long will Bitcoin continue to grow?

One of the global positive things for the main cryptocurrency is its steady growth in liquidity. This means that the conditions for transactions in the digital asset market are improving, as a result of which large transactions have less and less impact on the exchange rate of a particular coin.

This trend has continued since the end of 2022, when the FTX crypto exchange collapsed.. As the court ruled, its management did use client funds for other purposes, which led to losses amounting to billions of dollars.

Former head of FTX crypto exchange Sam Bankman-Fried

Now they are obliged to compensate the former head of the FTX trading platform Sam Bankman-Fried, who also received a prison sentence of 25 years.

Meanwhile, FTX's new team, which is working to eliminate the trading platform's debt, continues to auction off the company's remaining assets.. This also applies to Solana tokens, which is necessary to attract additional capital that will be used to compensate for losses of former users of the trading platform.

This week the winner of the respective auction was Pantera Capital with more than $5.2 billion in capital under management. In early March, Pantera management raised funds to buy out Solana from the bankrupt exchange for up to $250 million. This week the giant made a winning bid to acquire 2 thousand SOL, representatives of The Block note. And although this is a relatively small amount of a digital asset, such trades are held regularly, and the native cryptocurrency of the Solana network is in demand from so-called institutional investors.

Changes in the Solana cryptocurrency rate over the past months

According to CryptoPotato sources, good liquidity is the ability of an asset to maintain its value despite as many transactions as possible to buy and sell it on exchanges.

According to analysts, increased liquidity is a positive development for Bitcoin as it can mitigate volatility and reduce the influence of large players on the market.. Strong liquidity is necessary to maintain long-term positive dynamics in the price of BTC, and this is exactly what it is becoming.

Bitcoin Market Depth

Despite the overall positive dynamics in liquidity, experts also have concerns about trading activity over the weekend. Historically, managing liquidity during weekends and overnight sessions has been a challenge for crypto, which has led to a consistent decline in transaction volumes during these periods over the past three years.

BTC trading volumes over the weekend

A decrease in activity has a negative impact on liquidity, and after halving this trend becomes increasingly noticeable.

Also, despite the optimism associated with the approval of spot Bitcoin ETFs in January 2024, as well as improved liquidity conditions and increased transaction fees, uncertainty still prevails in the macroeconomy. This is all due to too high inflation, which has not yet been reduced to the specified levels.

Reduction of miners' rewards for mining blocks in the Bitcoin network

Previous halving cycles coincided with periods of low US Federal Reserve interest rates and stable inflation in the US economy, which contributed to subsequent bullish trends. Still, attracting capital for investment was quite easy, and the profitability of traditional instruments such as treasury bills left much to be desired. Now the opposite situation has developed in the industry.

For example, the US Federal Reserve maintained its benchmark lending rate at 0.25 percent between 2009 and 2016, briefly raised it to 2.5 percent in 2019, and then returned the rate to 0.25 percent during the third halving in 2020.

Bitcoin price growth after previous halvings

Low rates encourage investment in high-risk assets like Bitcoin. While BTC is sometimes seen as a safe haven for capital during times of crisis, it typically benefits from rate cuts due to its correlation with other assets with a similar level of risk.

Bitcoin growth after halving in the network of the first cryptocurrency in the long term

In the future, a rate cut alone will not be able to ensure sustainable growth of the exchange rate.. To maintain the bullish trend, the asset must attract new investments, including through American and upcoming Hong Kong spot Bitcoin ETFs. In such an environment, increasing liquidity and demand will be vital for the entire ecosystem in the coming months, experts say.

Overall, Kaiko experts believe in the ability of the coin market to set new price records. This version seems adequate, because in 2024 Bitcoin set its maximum before the halving. Well, during previous bullruns, the industry reached its peak at least six months after this procedure.