Due to Bitcoin's recent halving Estimated to occur around 9pm EST today when the Miners Block Subsidy reward will be reduced from 6.25 BTC to 3.125 BTC, we have asked several companies in the industry that it will affect Bitcoin price changes. We asked what kind of impact this might have.
Bitcoin halving (or “halving” as some refer to it) is associated with significant fluctuations in the price of the virtual currency. Although not directly causal, these events often precede significant bull runs in the Bitcoin market.
Bitcoin price after halving. Image: Bernstein.
“Historically, Bitcoin has experienced a notable price increase in the six months following each halving event. In fact, Bitcoin has seen its highest price in each of the four-year period between the previous halving event. ,” Binance CEO Richard Teng told The Block.
“The main question on everyone's mind is how the Bitcoin price will react to this halving,” said Thomas Perfumo, head of strategy at Kraken. “Perhaps the market cycle is starting earlier, but history shows that we have not even reached the end of the cycle yet.”
Nansen Research Analyst Aurélie Bartel agrees that price returns following Bitcoin's halving have generally been superior, being five to six times greater in the 250 days following the halving than in other years. did. “Currently, US macro (prolonged US interest rates) forces us to adjust risk assets, including cryptocurrencies, but our main scenario is that Bitcoin's upward trend remains intact.” Bartel said.
“While others look at the price of Bitcoin on a technical basis and predict it will rise, I look at the underlying fundamentals of supply and demand and draw the same bullish conclusion.” said Greg Beard, CEO of Stronghold Digital. Mining, added.
Is the halving “already factored in”?
The question of whether Bitcoin's halving is priced in or not is thrown around endlessly each time the halving approaches. However, unlike previous halvings, Bitcoin reached an all-time high of $73,836 before today's fourth halving on March 12th. Analysts at cryptocurrency exchange Coinbase claimed earlier this month that a halving is priced in this time.
Investment bank JP Morgan agrees. Analysts led by Nikolaos Panigirtzoglou said in a report on Wednesday that they do not expect a price increase after the halving, as it is already priced into the Bitcoin price, echoing a similar earlier view. repeated. “In fact, we will see a downward trend in Bitcoin price after the halving for several reasons.”
According to an analysis of open interest in Bitcoin futures, the reason for this is that Bitcoin remains in an “overbought state.” Furthermore, the price of Bitcoin is still well above JPMorgan's volatility-adjusted price of $45,000 relative to gold, and still above its expected cost of production after the halving of $42,000. analysts reiterated.
However, others do not agree with this. John Glover, former managing director of Barclays Bank and current CIO of crypto lending platform Redon, argues that it will take time for the decline in new supply to impact the market, and that market participation is He warned people to be patient.
“While many participants have noted the historical impact that halvings have had on BTC price, few are talking about how long it typically takes for a halving to materialize. Peak prices (before major corrections) were between $10 and $10 for the period 16 months after the actual event. Patience is the key here, but as you know, people rarely miss out on benefits,” Glover said.
“This halving will cause an immense supply shock to the system. If the current daily supply of US ETFs is 5-10 times, then after the halving the demand will be 10-20 times the supply. ” added Samson Mo, CEO of Bitcoin technology company JAN3.
“Bitcoin’s halving is priced in for the 0.1% of the world’s population that understands it,” Dan Held, general partner at Bitcoin-focused venture capital firm Asymmetrical, told The Block. Told. “The other 99.9% aren’t paying attention.”
Will it be different this time?
Beyond price trends, increased participation in the Bitcoin market through the recently launched Spot Bitcoin Exchange Traded Fund in the US is certainly a differentiating factor this time around.
“The fourth halving also decreased at a time when we have seen a significant increase in engagement from institutional investors since the last halving occurred in 2020,” said Alex Cable, Chaineries WEMEA Area VP.
Spot Bitcoin ETFs from BlackRock, Fidelity and others began trading in the US in January, followed by applications for spot Bitcoin ETFs from China Asset Management, Harvest Global, Vocera and Hashkey to be added to Hong Kong Securities Futures earlier this week. Approved by the committee.
“Financial institutions have not just entered the market, they are now shaping its trajectory, bringing new levels of trust, stability, and interest from mainstream finance. Bitcoin’s integration into the global economy. As technology advances, a whole new avenue is opening up for its demand and practicality,” Cable added.
Spot Bitcoin ETFs have gotten off to a great start this year, generating over $12 billion in combined net inflows in just a few months. However, Spot Bitcoin ETF flows have slowed since peaking at $1.05 billion in daily net inflows on March 12, according to The Block's data dashboard. It has also now endured five consecutive business days of net outflows, totaling $319.1 million heading into the halving.
“The Spot Bitcoin ETF has reshaped the Bitcoin market structure ahead of the halving by establishing a new anchor for BTC demand,” Scott Shapiro, senior product director at Coinbase, told The Block. told. This does not necessarily indicate an impending supply shortage, as the rate of newly mined Bitcoins will fall, but coupled with new supply-side movements, access to a broader capital base will increase. We believe that there is a possibility that this number will increase. The next few months after this halving will be different. ”
Stronghold’s Beard agreed that the combination of reduced coin supply and increased demand will create further imbalances. “The recent price rally, supported by Bitcoin ETFs, is likely to spark further interest and have a compounding effect. Given this, it would be surprising to see Bitcoin prices rise significantly over the next two years. It’s not,” he said.
“This uptrend was potentially driven by increased interest from institutional investors within the United States, which also contributed to a slight increase in market volatility during the period,” Hashdex said. CIO Samir Karbage told The Block.
“We are monitoring Bitcoin price trends and whether a pullback occurs following seven consecutive months of strong performance. Continued demand from ETFs could offset any potential pullback.” added Carbage. Support for Bitcoin remains as strong as ever as institutional interest accelerates amid a favorable macro environment and positive on-chain developments. ”
Some argue that the story behind this halving is more important than anything else. “The daily supply will be halved, but as a proportion of the average daily supply it will be a negligible amount,” Gemini chief engineer Claire Chin said. ETFs and the institutionalization of Bitcoin will be a big factor in this, and the price of Bitcoin will remain biased on the demand side. ”
“I believe the importance of the Bitcoin halving has been overstated. However, Bitcoin’s recent rally is much more than a fad. Bitcoin has matured with institutional adoption. Stronghold's Beard added.
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