The 4th Bitcoin Halving: Experts Divided on Post-Halving Price Impact Amid ETF Demand and Macroeconomic Shifts

April 19, 2024

The cryptocurrency world is eagerly awaiting a pivotal event: the Bitcoin halving, set to occur on April 20, 2024. This event will cut the reward for mining Bitcoin in half, from 6.25 BTC to 3.125 BTC per block, marking a significant milestone in Bitcoin’s evolution.

Experts have mixed opinions on the potential impact of the halving on Bitcoin’s price. Bitwise’s Senior Crypto Research Analyst Ryan Rasmussen believes that persistent or growing ETF demand, combined with the “supply shock” resulting from the halving, could help propel Bitcoin’s price further. He expects Bitcoin to have a strong performance over the next 12 months, with price predictions ranging from $100,000 to $175,000, although some predict gains reaching as high as $400,000.

However, JPMorgan analysts maintain that they don’t expect to see post-halving price increases due to the event being already priced in, with the market still in overbought conditions per their analysis of Bitcoin futures. Bernstein experts also don’t expect a Bitcoin rally until after the halving, predicting around 7% of the network hash rate to shut down due to less efficient mining operations becoming unprofitable.

The pre-halving period has been defined by volatility, but things are different this time amid elevated risk levels due to geopolitical tension and the influence of exchange-traded funds (ETFs). The bullishness will only be restored after halving when ETF flows continue, according to Bernstein researchers.

In Asia, the situation is different, with Hong Kong approving both BTC and ETH ETFs, potentially leading to South Korea, Japan, and Singapore following suit. This digital asset innovation could benefit cryptocurrency exchange-traded funds (ETFs) like the Invesco Alerian Galaxy Crypto Economy ETF (SATO) and Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC).

Goldman Sachs’ Fixed Income, Currencies and Commodities (FICC) and Equities team emphasize the need to consider prevailing macroeconomic conditions when assessing the potential impact of the halving on Bitcoin’s price trajectory. Previous halvings occurred against a backdrop of rapid growth in the M2 money supply of major central banks and near-zero interest rates, fostering risk-taking behavior across financial markets, including cryptocurrencies. However, today’s macroeconomic landscape presents a stark contrast, with high inflation and interest rates prevailing.

Despite these macroeconomic shifts, the Bitcoin price has surged impressively this year, reaching record highs well ahead of the halving, with inflows into U.S.-based spot exchange-traded funds (ETFs) playing a pivotal role in this surge. Analysts remain divided on the post-halving outlook, with some suggesting that a considerable portion of the anticipated surge has already been priced in, and others anticipating a “sell-the-fact” pullback following the event.

As the countdown to the halving continues, the convergence of market dynamics and macroeconomic conditions sets the stage for a potentially transformative moment in Bitcoin’s journey.

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