It remains uncertain how the upcoming halving will affect Bitcoin’s price behavior, especially with global liquidity looking like it has peaked in the near term.
With the next Bitcoin (BTC) halving expected in the second quarter of 2024, there is great speculation about its potential impact on the performance of the leading cryptocurrency asset and the market in general. However, according to reportsA new post on Coinbase notes that while the halving is seen as a positive event due to its impact on Bitcoin’s scarcity and supply-demand dynamics, the true outcome of the next halving is not guaranteed.
According to the report’s analyst, David Duong, understanding the market’s reaction to previous halving events requires careful analysis of many factors, including liquidity, interest rates, and movements in the US dollar.
Although Bitcoin halving is generally considered preferable, there is limited evidence from the three events on record because they were influenced by factors such as global liquidity metrics. The cryptocurrency exchange believes that past historical events are not enough to adequately predict the outcome of the upcoming halving in April 2024.
The Coinbase report highlights the challenge of establishing a clear pattern of market behavior during halving events. The complexity arises from the many factors that contribute to price movements, making it difficult to isolate the exact impact of the halving.
Thus, it remains uncertain how the upcoming halving will affect the behavior of Bitcoin’s price, especially with global liquidity looking as if it has peaked in the near term.
Retail demand for Bitcoin is set to halve before April 2024
Despite the uncertainty surrounding the market’s reaction, JPMorgan Chase, a prominent player in the financial industry, predicts that retail demand for BTC will continue to be strong, leading to the halving.
This situation confirms the great anticipation and great interest in the event within the crypto community.
A JPMorgan report released in May attributed the increase in hash demand for BTC to the emergence of the Bitcoin Ordinals and BRC-20 tokens. The report emphasized that as the halving approaches, the demand from retail investors for crypto assets is expected to increase exponentially.
The company is one of many financial services firms that have joined the crypto bandwagon. The bank launched its Bitcoin fund for institutional clients in 2021.
Like JPMorgan, other financial technology companies like BlackRock and Grayscale Investments are also actively involved in crypto. According to a recent report by Coinspeaker, BlackRock has filed an application with the US Securities and Exchange Commission (SEC) to offer clients an instant bitcoin exchange trading fund (ETF).
Look at the events of the previous half
Bitcoin’s first halving occurred in 2012 after it was officially launched in 2009. The miner’s block reward was reduced from 50 to 25 BTC at that time. This significant achievement led to a significant increase in the price of Bitcoin, which pushed the crypto-asset into a significant bullish trend. The market has seen a rise in investor interest, which has pushed the value of Bitcoin to new heights and cemented its status as a property currency.
The second event occurred in 2016, which reduced the block reward from 25 to 12.5 BTC. Likewise, this halving had a profound impact on the path of Bitcoin’s price. The crypto asset saw an impressive rally after the event, surpassing previous all-time highs. The market sentiment was very positive, which led to a period of significant growth for Bitcoin.
Recently, in May 2020, the crypto community witnessed the third bitcoin halving, which brought the block reward down to 6.25 BTC.
Despite the challenging conditions presented by the global pandemic, Bitcoin has shown its resilience and has embarked on a remarkable rally. The rally brought Bitcoin to unprecedented price levels of around $70,000 in 2021, capturing the attention of investors around the world.
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Chimamanda is a cryptocurrency enthusiast and seasoned writer focusing on the dynamic world of cryptocurrency. She joined the industry in 2019 and has since developed an interest in the emerging economy. She combines her passion for blockchain technology with her love of travel and food, bringing a fresh and engaging perspective to her work.