Navigating the Post-Halving Crypto Market: Insights and Expectations May 2024




Written by


Published on

May 09, 2024

In the last macro crypto market summary we focused on the Bitcoin pre-halving environment and what to expect post halving based on historical performance.  In this summary, we will focus on the ETF behavior and how it has impacted the price of Bitcoin, and where we are at in the Bitcoin current bull market cycle.

As of Tuesday, May 7th, 2024 Crypto asset manager Grayscale Bitcoin Trust (GBTC) has greatly reduced its Bitcoin (BTC) outflow since January 11th when the Bitcoin ETFs went live.  Since then, GBTC holders have been selling their holdings because they were able to purchase BTC at up to a 40% discount leading up to the ETF launch, and the high fees associated with the GBTC ETF holding.  In other words, early investors are taking profits.  This outflow of funds has had an impact on the price of BTC due to the large amount of selling pressure.  

In the graph below, you can see the outflow (selling pressure) that GBTC has been creating is starting to trend down, and has had two notable net inflow days of $63 million and $4 million in May.  The average selling of BTC through GBTC has been approximately $214 million per day for the last 79 days (net average).  The total net outflow of BTC has been a staggering $17.4 billion worth of BTC sold on the market since January 11th, 2024.  If this trend continues, we could see some upside in BTC in the near future with less daily sell pressure, and a potential future where we see GBTC contribute as a purchaser of BTC.

The price of BTC has survived this sell pressure thanks to the positive net inflows from the spot Bitcoin ETFs in the US, and other market participants purchasing BTC.  The ETFs maintain a positive balance sheet with BlackRock’s iShares Bitcoin Trust attracting the largest overall investment, with net inflows of $15.5 billion.

Other major net inflow contributors include Fidelity Investments’ Fidelity Wise Origin Bitcoin Fund with $8.1 billion, Cathie Wood’s ARK 21Shares Bitcoin ETF with $2.1 billion and the Bitwise Bitcoin ETF Trust with $1.7 billion.  The cumulative positive flow of investments into the spot Bitcoin ETF market is nearly $11.8 billion at the time of writing.  

So what's next?  Well, based on the previous article we are still in the Re-Accumulation phase where Bitcoin ranges sideways more or less for a few weeks, and could last up to 150 days.  But, we are starting to see some positive signs from the ETFs and from daily market activity. 

As posted by Rekt Capital, we are past the halfway point of halving volatility as indicated by the orange circles on the chart below.  Once we exit this area, historically we have seen the beginning of the next phase of the BTC Bull Market, which would be the Parabolic Uptrend.

Another chart by Rekt Capital shows a comparison of the 2016 bull market and our current price action in 2024.  You can see that the price behavior is very similar to the 2016 halving, where we saw an incredible increase in value of approximately 3000% with a blow off top in 2018.  We should obviously expect diminished returns, but the historical similarity is there.   

In another chart provided by Stockmoney Lizards, we could be witnessing a scenario where Bitcoin re-visits the recent lows set over the past few weeks near $58k-$57K, and then starts to climb its way upward.  This potential scenario also falls in line with what rekt Capital is showing in his charts, and could be supercharged by ETF re-interest and more net positive inflows from the ETFs.  On the other hand, we could also go back down around $50k  where we have historical major support and then reset from there. 

Lastly, It is also important to remind people that we are approximately 37% into the bull market.  People keep mentioning that they are waiting for the bull market to start.  But the bull market started months ago and we are going through phases of this current bull cycle.  Be sure not to sit on your hands for too long, or get shaken out by sideways action and misinformation.  We could still see some more downside for BTC in the short-term, but the overall trend is still up.  The BTC bull market is currently on track and doing fine. 


Sign up to our newsletter.

Stay in the loop with our TradiFi & DeFi News, Investments, Market News, Gray Digital Events, Research and more...

© Copyright 2024 Gray Digital Capital Management, Inc. All Rights Reserved.

Services are provided by Gray Digital Capital Management, Inc.; Gray Digital Capital Management USA, LLC and Gray Digital Technologies, LLC ("Gray Digital"), collectively "The Company",

Investors and other participants in the Gray Digital ecosystem should carefully consider their financial circumstances, risk tolerance, and investment objectives before deciding to invest in the Company or interact with the ecosystem in any way. The risks outlined in the risk disclosure are not exhaustive, and potential investors and participants should review the Company's offering documents and terms of use for a more complete discussion of the risks associated with investing in the Company and participating in the Gray Digital ecosystem. By investing in Gray Digital or participating in the Gray Digital ecosystem, you acknowledge that you have read, understood, and accepted the risks detailed in this legal risk disclosure.

Nothing on this website should be considered an offer, solicitation of an offer, or advice to buy or sell securities or investment products. Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections are hypothetical in nature and may not reflect actual future performance. Account holdings and other information provided are for illustrative purposes only and are not to be considered investment recommendations. The content on this website is for informational purposes only and does not constitute a comprehensive description of Gray Digital's advisory services.

The performance discussed herein is historic and reflects an investment for a limited period of time. It should not be assumed that future investors would experience returns, if any, comparable to those illustrated herein. Past performance is not indicative of future returns. Investment results will fluctuate. Returns are not guaranteed. All investments are subject to the risk of loss, including the loss of principal. No representation is being made that an investment account has, will, or is likely to achieve profits or losses equal to the profits or losses shown. Actual returns will vary greatly and depend on personal and market conditions. Before investing, consider your financial goals and the costs of using the program.

Furthermore, the information set forth has been obtained from sources that the Firm believes to be reliable; however, these sources cannot be guaranteed as to their accuracy or completeness. The information contained herein is not, and should not be construed as, an offer to sell or the solicitation of an offer to buy any securities.

This information contains certain “forward-looking statements,” which may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms.

Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of the depicted investment strategy. All are subject to various factors, including, but not limited to general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting operations that could cause actual results to differ materially from projected results.

Targeted returns (e.g., forward-looking statements of performance up to a stated return) reflects the returns that the Company is seeking to achieve over a particular period of time. Projected returns reflect the Company's performance estimate - i.e., the returns that the Company believes can be achieved using the advertised investment services. Target returns are presented to inform clients or potential clients about the Company's risk tolerances when managing investments and to provide information useful to a client or potential client when assessing how the the Companys strategy fits within the investor's overall portfolio. Target returns are not guarantees or promises of future return.

Please refer to Gray Digital's documentation for important additional information. Certain investments are not suitable for all investors. Before investing, you should consider your investment objectives and any fees charged by Gray Digital. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested, including principal.

Contact Gray Digital at[email protected]  167 Madison Avenue, New York, NY, 10016.