The clock is ticking on Bitcoin’s (BTC) halving and it appears the ETF mania has accelerated the timeline of its arrival. Indeed, we have just a couple of weeks left before the big event. So it’s no surprise that the halving is all crypto investors and media can talk about right now. But while we can still expect some predictable trading behavior in the wake of the big day, we’re now in a very different market that calls for different trading strategies.

Over the past three cycles, the halving has been all about the huge spike in volatility. We would typically expect a sell-off of 30%-40%, followed by a stratospheric rise to a new all-time high within, on average, 480 days of the halving date. This time, though, the spot Bitcoin ETF has changed everything.

To understand where the price of Bitcoin is going from here, it is the asset’s volatility that we need to look at more closely. Over recent months, we have seen the anticipated drawdowns as pre-halving excitement builds. Yet these drawdowns have been anemic by previous cycles’ standards. This time, Bitcoin’s corrections have been far shallower, not exceeding 25%. Indeed, the latest drawdown was only around 15% before BTC bounced back once again toward the $70,000 mark.

Related: Bitcoin maxis are about to kick off the altseason as BTC turns institutional

This more muted sell-off is a harbinger of a softer rally once we’re over the halving hump. There’s little doubt that Bitcoin will see the customary sell-off following the halving, and it will certainly reach a new all-time high after. Equally, returns will still look a lot more exciting than they do for, say, traditional equity holders. But don’t expect the more than 600% price increases we saw after the last halving in 2020. Those days are over.

So why is this happening? There are two factors at play here. Firstly, the percentage of long-term Bitcoin holders has reached a record of around 14 million BTC — more than 70% of the total circulating supply of 19,670,043 BTC. Over recent months, record amounts of BTC have been withdrawn from exchanges to cold wallets as more and more holders adopt a “diamond hands” approach.

Percentage of total Bitcoin supply held by long-term holders, 2009-2024. Source: Glassnode

But what really has led to a pronounced shift in behavior is the arrival of the spot Bitcoin ETF. Today, ETFs are hoovering up more BTC supply from the market than miners can supply. On average, spot BTC ETFs have taken in roughly 10,000 BTC per day since launch, while miners are only generating 900 new BTC every day. This is exacerbating scarcity and leading to upward price action.

Related: Bitcoin just hit a record in open interest — expect imminent volatility

Crucially, though, this also means a drastic drop in long-term volatility because ETF investors are fall more long-term minded than the average crypto trader. Though we’ve seen a spike in volatility recently as we approach the halving event, it remains well below levels we’ve witnessed during previous halvings. CoinGlass data shows that the 30-day historical BTC/USD volatility has dropped from a high of nearly 18% in April 2013 to around 4% at the time of writing. You’d expect to see this percentage on a U.S. equity fund factsheet, not a cryptocurrency price chart.

Bitcoin price (yellow) versus Bitcoin volatility (green), April 2013 through April 2024. Source: CoinGlass

This is because the investors coming into the spot Bitcoin ETFs now are those same mom-and-pop investors and institutions who have poured trillions into S&P 500 ETFs. They are long-term holders for whom three years is the minimum investment term, and their decisions to buy or sell an investment are dictated by long-term drivers, like macroeconomic conditions, structural market changes, and long-term return potential. 

So what does this mean for investors hoping to profit from the halving? They’ll have to think a lot more like the traditional equity investor than the crypto degen. They’ll have to swap Messari for Morningstar (a global provider of data on traditional funds) to gauge the ebbs and flows of spot Bitcoin ETF assets under management. They’ll have to keep one eye firmly fixed on what long-term holders are doing, because they are now the ones in the driving seat.

And if they want those 600% returns, they’ll have to look elsewhere. That’s not what we’ll see after this Bitcoin halving. The trade-off, though, will be steadier, more reliable returns that won’t skew the volatility profile of a typical balanced portfolio out of all proportion. And for most investors, this is a much more appealing prospect than an asset that has a 50/50 chance of going to the moon or disappearing completely.

Lucas Kiely is the chief investment officer for Yield App, where he oversees investment portfolio allocations and leads the expansion of a diversified investment product range. He was previously the chief investment officer at Diginex Asset Management, and a senior trader and managing director at Credit Suisse in Hong Kong, where he managed QIS and Structured Derivatives trading. He was also the head of exotic derivatives at UBS in Australia.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.