With less than three weeks left until the Bitcoin halving, speculation continues unabated about what will happen to Bitcoin's price once block rewards to miners are halved. While some companies have shared glowing predictions about the potential for price increases, crypto exchange Coinbase is urging investors to be cautious.
“When you read the fine print and safe harbor language in materials from institutional sources, the first language you see is [in] “Past performance is not an indicator of future success or performance,” said John O'Lauren, Managing Director, Coinbase Asia Pacific (APAC). Decryption. “So I think that’s really our approach in branding.”
Ahead of the halving, Bitcoin soared to an all-time high of $73,737 on March 14th. Bullish investors like Skybridge Capital founder and managing partner Anthony Scaramucci believe the price of Bitcoin could soar to $200,000 within 18 months of the halving. There is. Other industry analysts put the post-halving price forecast at $150,000.
Bitcoin halving refers to a periodic event built into the protocol that reduces the reward for mining a Bitcoin block by half every 210,000 blocks, or approximately every four years. This is intended to slow down the rate at which new Bitcoins are created, limit inflation, and extend issuance over a long period of time.
The next halving is scheduled to occur around April 20, 2024, and the recent surge in Bitcoin prices is thought to be partly due to the upcoming milestone. However, Coinbase urges investors to remain calm about potential future market movements.
“When you look back at these cycles, it takes the market, especially the research market, time to understand what's going to happen,” O'Lauren said. “So I would encourage people to take a step back, breathe a little bit, and see if there are metrics or other indicators that they can look to that give them confidence.”
Despite the continued bullish sentiment surrounding Bitcoin, Coinbase maintains that correlation does not imply causation and that price fluctuations are influenced by factors such as market sentiment, adoption trends, and macroeconomic conditions to begin with. He urged caution, stating that there are many impacts.
A type of technical analysis, some speculators use past halving events as part of a data set to make predictions. Analyzing Bitcoin price changes due to halving is difficult because there are only three events in the past. Past halvings have shown a variety of price changes, indicating that the situation is important, Coinbase explained, adding that more halvings are needed to get a clearer pattern.
The impact of institutional investor interest
What further distinguishes the 2024 halving from past events is the addition of Bitcoin ETFs to the equation.
“I don’t think you can separate new demand for Bitcoin from the announcement of a spot ETF,” O’Loren said.. “I think that's the sinking reality, but we'll have to see where it goes from here.”
In January, the U.S. Securities and Exchange Commission approved 11 Bitcoin ETFs. Since then, billions of dollars have flowed into spot ETFs from companies like BlackRock, Bitwise, HashDex, VanEck, and Fidelity.
While the SEC is said to be hostile to cryptocurrencies and regulation by law enforcement, O'Lauren said the Australian Securities and Investments Commission regulator takes a “conservative position”. .
“There have been recent cases in Australia where ASIC has taken issue with issuers of various loans and other products in the Australian market that are, or are deemed to be, in breach of Australia's current ASIC and corporate securities laws. There were a few,” O’Lauren said. “Most recently, there has been some good backlash and legal precedent against things that support the digital asset industry.”
O'Lauren said the cryptocurrency industry needs to do more to educate policymakers about technology and digital assets.
“It's important for us as an industry to make a real effort to push crypto digital asset regulation up the totem pole of importance, because there are a lot of really big things happening in Canberra, just like in Washington,” he said. Stated. “Cryptocurrency isn't always the most important information in front of senators and congressmen or their representatives. But lately, there's been really good momentum behind it.”
How does Coinbase handle halving?
Cryptocurrency exchanges often experience outages during Bitcoin rallies, resulting in significant increases in user traffic, trading activity, and large fluctuations in Bitcoin price. For some traders, Coinbase's collapse during times of high volatility is a sign that a bull market is imminent.
O'Lauren said Coinbase is ready for the halving.
“Coinbase is in the middle of a crypto winter and is the best place in the world to stress test your business and build for the next bull market,” he said. “To avoid running out of money, there needs to be enough liquidity and enough funds in treasuries in different countries around the world to be able to absorb the impact of a surge in interest. ”
Last month, Coinbase crashed again during a ferocious traffic spike, with poor performance reported on the exchange's status page. Coinbase customers started reporting zero balances in their wallets.
“Some users may experience intermittent zero balances across their Coinbase accounts and delays across the page,” Coinbase's status page states, adding that transactions are unaffected. Ta.
O'Lauren said Coinbase is seeing record interest and adoption of its platform following the start of the recent bull market, adding that the company is ready but aware of the hurdles.
“Network resiliency, a huge commitment to cybersecurity, is very important to us,” O'Lauren said. “And we're really dotting the I's and crossing the T's to make sure we do that from a security standpoint.”
Looking to the future
Coinbase notes that daily net inflows into the U.S. Spot Bitcoin ETF have been consistent and there are significant tailwinds for Bitcoin, so this halving cycle could be different and new mining He said that a decrease in the supply of Bitcoin could contribute to tightening market trends. On the other hand, Bitcoin ETFs symbolize that major financial institutions have officially recognized virtual currencies as a new asset class.
Coinbase said in a report that it believes the current price movement is just the beginning of a long-term bull market, and that further price increases will be needed to foster the relationship between supply and demand.
“I think this event is just another anchor and another data point in the industry's journey. We've had Bitcoin halvings before, but they're far beyond our lifetimes. We're going to see another Bitcoin halving,” O'Lauren said. “This is another event, and it's an important event, but it's not industry-defining,” he said, citing the collapse of FTX as an example.
“This is just another important tectonic event in the history of cryptocurrencies,” he concluded.
Edited by Ryan Ozawa.
