Less than 1 Day to Bitcoin Halving: What Do the Experts Think?

KEYTAKEAWAYS

TABLE OF CONTENTS

• KEY TAKEAWAYS
• WHAT DO THE EXPERTS THINK ?
• CONCLUSION
• DISCLAIMER
• WRITER’S INTRO

CONTENT

On April 18, 2024, Google Trends data showed that search interest for “Bitcoin halving” reached an all-time high. Nigeria, the Netherlands, Switzerland, and Cyprus showed the most interest in the Bitcoin halving.

With less than one day left until the halving, what do well-known institutions, users, and KOL think about it?

WHAT DO THE EXPERTS THINK ?

• Coinbase – No.1 Crypto Exchange in the United States

According to the Coinbase x Glassnode Q2 report, the market dynamics of Bitcoin have matured, reducing the impact of new Bitcoins on market prices, primarily driven by increased institutional demand and the adoption of Bitcoin ETFs. While miners add about 900 Bitcoins daily, Bitcoin ETFs often purchase more, significantly influencing supply and market liquidity. ETFs also trigger substantial capital flows that affect market volatility, impacting price stability and market sentiment independently of traditional supply-demand constraints.

The report highlights that spot Bitcoin ETFs are among the fastest-growing ETFs. A small allocation to cryptocurrencies significantly enhances risk-adjusted returns. From April 2019 to March 2024, adding just 3% in cryptocurrencies raised the traditional 60/40 portfolio return from 33.3% to 52.9%, and 5% to 67.0%.

• Binance – The world’s largest exchange by trading volume

Binance recently outlined the following predictions in a report:

1. Bitcoin Halving: Intended to regulate the supply of new BTC tokens, historically affecting supply dynamics, market sentiment, and adoption.

2. Increased Awareness: Halvings tend to increase Bitcoin’s visibility, leading to rises in price and adoption rates. They also spark discussions related to blockchain technology, Bitcoin network dynamics, and cryptocurrency as a unique asset class.

3. Historical Patterns: Although historical patterns show a price increase and expanded adoption in the months following a halving event, it’s important to note that the upcoming April 2024 halving has already proven to be unprecedented in several key aspects.

Read more about Bitcoin halving : 

• Bitcoin Halving 2024 Introduction – How Can We Profit from It?

• Bitcoin Halving 2024: Will It Be Different From the Previous Three?

Binance Research:

According to Binance’s latest study, investor interest in cryptocurrencies has been growing ahead of the global Bitcoin halving event. A survey of over 2000 Australian cryptocurrency investors found that more than 80% of respondents view the upcoming halving positively for the industry, with over half expecting a direct price increase of Bitcoin.

Ben Rose, General Manager of Binance Australia and New Zealand, noted that the halving has had a positive impact on BTC trading, with nearly 80% of Binance Australia users planning to increase their BTC holdings in the near future.

• Grayscale – Holds BTC assets (GBTC) valued at over $19.1 billion

According to an analysis report by asset management firm Grayscale, fundamental changes in the supply and demand balance of Bitcoin could have a significant impact on cryptocurrency prices, especially with the upcoming halving event.

Historically, halving events have typically led to cycles of price increases. However, a new factor, namely ETFs, is also expected to influence Bitcoin’s performance in the April halving this year. The report notes, “In addition to the overall positive on-chain fundamentals, the market structure of Bitcoin post-halving is conducive to price increases.”

Grayscale’s report points out that the current block reward is 6.25 Bitcoins, which at a price of $43,000 amounts to about $14 billion annually. In other words, to maintain the current price, there needs to be a buy pressure equivalent to $14 billion during the same period. “After the halving, this demand will halve: the block reward will drop to 3.125 Bitcoins, reducing to $7 billion annually, effectively alleviating selling pressure.”

Post-halving, each block’s mining reward will decrease to 3.125 Bitcoins, and to cope with cost pressures, miners typically sell more of their Bitcoin reserves, thus increasing supply and lowering prices.

Grayscale notes that the recent launch of nine Bitcoin spot ETF products on Wall Street could “act as a counterbalance to miner selling pressure.” The report states, “Bitcoin ETFs could significantly absorb selling pressure, potentially reshaping the market structure of Bitcoin by providing a stable new source of demand, which is beneficial for prices.”

• Goldman Sachs – Global leading financial giant

Investment banking giant Goldman Sachs has cautioned its clients in a report not to overinterpret Bitcoin’s historical halving cycles. The report states, “Historically, the previous three halvings have been accompanied by a rise in Bitcoin prices, although the time taken to reach historical highs has varied significantly. Given the current macroeconomic environments, caution should be exercised when extrapolating from past cycles and assessing the impact of halving.”

• Bitwise – BITB ( Bitcoin ETF )

Bitwise Asset Management notes that historically, BTC prices have often underperformed in the month following a halving. In an article dated April 16, Bitwise observed that while the price movements of BTC were modest in the month following the previous three halvings, they saw triple-digit gains in the subsequent year.

For instance, in the month following the 2012 halving, BTC rose by 9%, but surged 8,839% over the next year. A similar pattern occurred in 2016: BTC fell 10% one month post-halving, but soared 285% in 2017, reaching a peak of $20,000. Similarly, in the month after the 2020 halving, BTC increased by 6%, and then rose 548% in the following year. Bitwise writes, “The data is limited but reveals an interesting pattern: market prices tend to underestimate the long-term impact of halvings.”

• J.P. Morgan – World’s largest banking institution

In a research report on Tuesday, JPMorgan stated that the recent weakness in mining stocks presents an attractive entry point for investors ahead of Bitcoin’s halving.

The report highlighted that Bitcoin has risen 43% year-to-date and 130% over the last six months, as “part of the typical post-halving rally appears to have been pulled forward.” Bitcoin’s quadrennial reward halving, which is expected to occur around April 19-20, will slow the rate of Bitcoin supply growth.

The bank is particularly bullish on overrated stocks like Riot Platforms (RIOT) and Iris Energy (IREN), citing their attractive relative valuations. The analysts wrote, “As the Bitcoin halving approaches, we anticipate increased volatility and trading volume in both Bitcoin and mining stocks.”

• Bernstein – Wall Street investment institutions

Analysts at the research and brokerage firm Bernstein predict that Bitcoin will resume its bullish trajectory after the halving and have reiterated their target of reaching $150,000 by the end of 2025.

In a report to clients on Wednesday, Gautam Chhugani and Mahika Sapra wrote, “We expect Bitcoin’s bullish trajectory to resume after the halving, as mining power adjusts and ETF inflows are restored. Additionally, we believe the integration of spot Bitcoin ETH with exchanges and continued support from RIAs will provide structural demand for Bitcoin. We still anticipate Bitcoin reaching the cyclical high of $150,000 by 2025.”

CONCLUSION

The investment market remains unstable with mixed signals on the immediate effects of the upcoming Bitcoin halving. While the long-term outlook appears bullish, investors are advised to consider the increased volatility and to diversify their strategies to mitigate risks associated with the current macroeconomic environment and the nascent nature of cryptocurrency regulations.

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