In anticipation of Bitcoin's fourth halving, scheduled for mid-April, Coinbase Institutional has released a primer for investors.
Bitcoin halving occurs every four years, or every 210,000 blocks mined, and once 840,000 blocks are reached, miner rewards are halved from 6.25 Bitcoins to 3.125 Bitcoins per block.
This paper examines the impact of the halving to date and incorporates recent developments in the crypto market, such as the introduction of Bitcoin ETFs and Bitcoin's rise to unprecedented heights prior to the halving, to improve institutional investment. The purpose is to guide you through the house.
Historically, Bitcoin has experienced significant valuation increases in the months following past halvings. The first halving led to a dramatic rise in the value of Bitcoin (BTC), rising 139% in the six months leading up to the event and 923% in the six months following. Although the extent of halving growth to date has not matched this initial spike, a post-halving upward pattern has been observed.
Coinbase analysts highlight the unique circumstances surrounding the upcoming halving, noting that Bitcoin is up 157% since October, suggesting the potential for continued growth.
“Although halving may have a positive impact on Bitcoin's performance, historical evidence for this relationship is still limited and somewhat speculative,” the firm's analysts wrote. explained.
The report also points to macroeconomic factors such as a possible Federal Reserve interest rate cut that could impact Bitcoin's trajectory. We also take into account the behavior of long-term holders, which Glassnode defines as investors who have held for at least 155 days. This long-term holder has historically been less likely to sell in response to a halving.
The primer doesn't overlook potential challenges, including the possibility of increased selling pressure from miners adjusting to lower rewards and companies filing for bankruptcy.
