Bearish pressure was strongly felt in the cryptocurrency markets earlier this week as Bitcoin fell under $33K, thus leading some analysts to warn about a slow and gradual downturn towards the $30K level, but a higher support level should not be entirely dismissed for various reasons. Chinese financial regulators have pretty much wrapped up their crackdown on Bitcoin miners, and the hash rate is looking better a few months after the halving event.
The Bitcoin halving already took place earlier this year, with the result of a decrease in the number of new bitcoins being created and a fall in the block reward. As a result, the estimated market capitalization of Bitcoin took a hit, but only briefly. The market has yet to digest the big sell-off it has faced this year. As a result, some investors and analysts believe that the bearish impact on the cryptocurrency’s price could begin to have a noticeable impact as early as this week, with the recent market correction providing the first taste of things to come.
During the run-up to the recent Bitcoin price correction, analysts and commentators saw some clear trends. For example, it was noted that the halvingc would have caused the Bitcoin price to drop, as Bitcoin's value is largely driven by investors’ hopes and beliefs around the future block reward reward. At the same time, there was a sense among some experts and commentators that the drop in the price was only a small correction that would be reversed in the weeks after the halving.
The reality of the situation is that Bitcoin needs more positive fundamental developments such as news about the token becoming legal tender in El Salvador. More importantly, Bitcoin needs to see positive changes to the market and user adoption. A decline in prices can actually be beneficial, and there may be some benefits for Bitcoin even if its price continues to drop, but the halving and subsequent correction are clearly a key sign of a maturing cryptocurrency.
The biggest reason to be bullish about Bitcoin is not because of a temporary correction or market sentiment that is currently bearish. Instead, it's a combination of fundamental shifts in the market and changes in the psychology of the market.