The ‘halving’ of Bitcoin has been slipping, but cryptocurrency bulls are unconcerned.

This time last week, proponents of bitcoin were celebrating record highs; however, the cryptocurrency has been suffering from a hangover ever since.

The token, which was selling at slightly under $68,000 on Thursday, has dropped by as much as 13% since reaching a record high of about $74,000.

These kinds of sell-offs are typical in the cryptocurrency space; for example, bitcoin has gained almost 50% so far this year, driven mostly by the enthusiasm surrounding the Securities and Exchange Commission’s approval of eleven spot exchange-traded funds in January.

Temporary downturn

Although many investors have blamed profit-taking—traders selling some of their holdings after the prolonged surge in an effort to lock in gains—for the recent decline, it is unclear exactly what has caused it.

Other cryptocurrencies have also seen difficulties; in the last five days, ether has down 8% to roughly $3,500, and the well-known altcoin Solana has dropped 12% since Monday.

According to chief economist Marc Ostwald of ADM Investor Services International, investors may choose to sell bitcoin or switch to more stable investments like bonds or the US dollar if they see indications of an impending economic slowdown.

“I can see a scenario where some of the risks crystallize, and people might want to get out of bitcoin,” he stated to Business Insider. Let’s say there is a bad economic situation. Individuals may decide to sell their bitcoin holdings in order to offset losses from other sources if they realize they have made some great, sizable gains from the cryptocurrency.”

However, Ostwald said that the market may have grown “anesthetized to major events” like rising interest rates and the conflict in Ukraine given the rise in risk assets over the past year, particularly tech stocks and cryptocurrencies.

Some analysts, who are far more upbeat, are writing off the latest sell-off as a brief glitch before the eagerly awaited “halving” event that is projected to occur in April.

Half of the reward for mining new bitcoin blocks will be given to miners as part of a mechanism to keep the token scarce.

In the years leading up to the last halving in 2020, there was a 20% decline in Bitcoin, possibly due to traders choosing to adopt a “buy the rumor, sell the news” approach.

However, as the market reacted to reduced supply levels in the immediate wake of the incident, its price shot up from about $9,000 to roughly $60,000 in less than a year.

Kathleen Brooks of the online brokerage XTB told BI, “Past halvings have gone unnoticed — but that hasn’t happened this time because bitcoin is so much more mainstream, and that should help keep up demand.”

“Why wouldn’t people want to own bitcoin if they think it’s a finite asset, a bit like gold?” she stated.

According to Sandy Kaul of Franklin Templeton, who spoke with BI earlier, the halving of bitcoin and the growth of spot ETFs might lead to a “explosive setup.”

“The dynamic could put us in uncharted territory,” she stated. “We’ve never had both a supply shock and a demand shock at the same time.”