Why does BTC crash right after halving?

Plus: Cross-chain updates and what we "Fetcch-ed" this week

Welcome to The Fetcch Newsletter!

In today’s email:

  • Interoperability Space Updates

  • A deep dive on "BTC’s crash after halving”

  • What we “Fetcch-ed” this week?

  • And much more…

Interoperability Space Updates:

  1. Solana approves the proposal to address voting delays and reduce network congestion (Source)

  2. First Digital’s stablecoin FDUSD reaches $3.3 Billion market cap (Read more)

  3. Ethereum ETF hopes fade as SEC's crypto crackdown dashes approval expectations (Source)

  4. Fantom's native token FTM rises 8% on USDC.e stablecoin launch (Read more)

Deep Dive: Comparing Blockchains - BTC’s crash after halving

Question for those bullish on Bitcoin Halving -- Why does BTC crash right after the event?

  • $12.25 --> $8 (2012)

  • $650 --> $465 (2016)

  • $8,700 --> $8,500 (2020)

Here's why:

Some events have affected Bitcoin's price at a fundamental level

  • Launch of Bitcoin futures contracts

  • China's crackdown on the crypto

  • Tesla's tweets about ditching Bitcoin

But these are one-off events, Bitcoin halving is a regularly scheduled occurrence.

One potential reason behind the post-halving crashes is profit-taking by investors who have held their positions for an extended period.

Often motivated by the "January Effect" (Refer to image below)

Stock prices tend to rise in the first month of the year.

This is often attributed to tax-loss harvesting.

Investors may consider rebalancing their portfolios by selling risky assets like Bitcoin in December and reinvesting in stocks in January.

Another factor is the "mining capitulation".

During the profitable season, miners accumulate Bitcoin and increase the network's hash rate. (Opposite during halving)

According to data from Bitinfocharts, the Bitcoin hashrate dropped during the last two halvings.

But, a point comes when....

Miners need to sell their holdings to upgrade or purchase more equipment and that coupled with other bearish market sentiments can lead to mining capitulation and a subsequent price crash.

Final thoughts....

Despite these cyclical corrections, Bitcoin has consistently demonstrated its resilience and ability to recover from significant drawdowns.

Wall Street traders tend to say that time in the market beats timing the market.

But for the Bitcoin community, HODL is a way of life.

Deciding when to buy depends on you. But hurry up: The halving is just two weeks away!

What we “Fetcch-ed” this week?

A lot of backend development is in progress. So for now, stay tuned for more public updates :)

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