The cryptocurrency market is immersed in anticipation and speculation as a crucial event approaches: the Bitcoin halving. This process, scheduled to occur in the next 48 hours, involves halving the rewards miners receive for creating new blocks.
With each halving, the supply of Bitcoin decreases, historically having a significant impact on its price and the overall market dynamics.
On Wednesday, April 17, 2024, Bitcoin experienced a notable drop, reaching the $60,000.00 zone just before the expected halving date. This decrease, taking Bitcoin to its lowest level since February 2024, could be interpreted as investors anticipating the upcoming events. Expectations surrounding the halving are high, as many view this event as a catalyst for Bitcoin and other digital assets.
Bitcoin halving is expected to take place either today – Friday – or on Saturday. This will depend on the rate at which new BTC is being minted by miners.
“Despite it being one of the biggest moments in crypto, the halving is likely not to move the needle too much in terms of values,” said Nigel Green, CEO of the deVere wealth management group. “Indeed, it’s likely to be a major price non-event. Investors, traders, and speculators, priced-in the halving months ago. As a result, a significant portion of the positive economic impact was experienced previously, driving up prices to fresh all-time highs last month.”
Following the first halving in November 2012, Bitcoin’s price jumped around 9,500% to a peak of $1,160 over 367 days. The 2016 halving saw the price jump by 3,040% over 562 days to 19,660, and the 2020 halving saw it surge by 802% to a top of $73,800 over 1,403 days.
Is halving going to be good for the Bitcoin price?
However, it’s essential to recognize that the halving is not necessarily a period of celebration for investors. Contrary to common belief, this event can be earmarked by significant profit-taking by investors, who tend to sell their positions around this date. This trend can generate downward pressure on the price of Bitcoin, even amid optimistic expectations about its future value.
“Previous Bitcoin halvings followed a clear sequence: pre-halving surge, volatility, then a prolonged bull run,” says David Doss, Founder and Managing Director at CKC Management, a specialist digital assets fund manager in the US. “We’ve witnessed the first (shorter) phases in this pattern: pre-halving surge and choppy pullback. Experts now anticipate the longer phase: $100K to $200K+ Bitcoin within 6-18 months. Now, savvy investors are flocking to actively managed hedge funds for their liquidity, agility, and superior risk-adjusted returns.”
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There might even be a temporary sell-off as investors employ a ‘sell the news’ strategy. Those who follow the sell the news strategy take advantage of this anticipation by buying the asset before the news is released, hoping to capitalize on the price increase leading up to the event.
“While many expect a surge in prices after the halving, the reality is less straightforward,” said Manu Choudhary. CEO at DeFinity Markets, a digital assets exchange. “Historical data shows that past halvings haven’t consistently led to immediate upward trends. Some witnessed initial price dips followed by later rallies, while others experienced surges well before the event itself. It’s crucial to recognize that the halving may not directly cause a price surge. Bitcoin’s price is influenced by various factors such as regulatory changes, institutional adoption rates, and overall market sentiment. The halving more likely acts as a catalyst, shaping investor perception and potentially contributing to a price increase within broader market dynamics.”
Choudhary said his expectation was that there would be a BTC sell-off after the halving.
The Bitcoin halving is a phenomenon that occurs approximately every four years, and its impact on the cryptocurrency market is the subject of intense scrutiny and debate among analysts and financial experts. It is expected that, with the decrease in Bitcoin supply, its value will be boosted, but the market reality may be much more complex than theories suggest.
“In this context, it is crucial to consider other factors that influence the price of Bitcoin,” said Ernesto Di Giacomo, a market analyst with CFD broker XS.com. “The strength of the US dollar, for example, has exerted pressure on cryptocurrency markets in recent weeks. Strong inflation and retail sales data in the United States have given the Federal Reserve few reasons to consider interest rate cuts, negatively affecting market sentiment towards Bitcoin and other cryptocurrencies.”
The Bitcoin halving is an event generating both high expectations and intense speculation in the cryptocurrency market.
“As we approach this crucial date, investors are evaluating a series of variables to understand and predict price movements in the market,” said Di Giacomo. “While the halving promises significant changes, it is essential also to consider other external factors that may influence the dynamics of the cryptocurrency market in the coming days and weeks.”
