Instead of skyrocketing like the previous three “halvings”, this year’s most anticipated event did not help Bitcoin’s price improve significantly.
At around 7am this morning, Bitcoin (BTC) completed its “halving“, according to cryptocurrency data and analytics firm CoinGecko. “Halving”, an event that usually occurs every four years, was programmed into the Bitcoin network by its creator Nakamoto Satoshi, and every 210,000 units mined, the reward for miners will be halved. Combined with a finite supply (maximum of 21 million units), the reward is getting smaller and smaller, creating scarcity for BTC to ensure supply is always controlled.
Contrary to many predictions, the price of this coin was quite stable during the event, holding around $ 63,700 per unit. BTC has not had any strong price increases recently. Yesterday, the price dropped to a low of $ 59,685 before quickly rising back above $ 65,000.
Typically, it takes several months after an event for Bitcoin prices to make a big jump, as the reduction in miner rewards takes time to sink in. In the past three halvings, the cryptocurrency took an average of five months to rally, and it was able to sustain the rally for about seven months.
However, this time around the “halving”, analysts predict that Bitcoin’s price movements will be different as it has recorded many significant price increases, even reaching record highs before the event. Therefore, price expectations surrounding the “halving” seem to have diminished.
Brett Hillis, a fintech expert at Reed Smith, said: “It’s hard to say whether the previous record high can limit Bitcoin’s price increase after the ‘halving’.”
Meanwhile, JP Morgan analysts wrote in a new report released this week: “We do not expect Bitcoin prices to rally following the halving event as it completes the valuation cycle.”
Instead, they expect BTC prices to fall after the halving as the coin has become overbought and venture capital funding for the crypto industry has been “sink” this year. Goldman Sachs added that for Bitcoin to rally like previous halvings, macro conditions need to support investors’ risk appetite.
Another important reason for the quiet halving is that the US Federal Reserve (Fed) is still quite hesitant about the possibility of cutting interest rates, which makes investors cautious about pouring money into BTC and other risky assets.
Bitcoin enthusiasts have long been eagerly awaiting this event because the price of the world’s largest cryptocurrency has always increased sharply after previous “halvings” in 2012, 2016 and 2020. Chris Gannatti – head of global research at asset management firm WisdomTree, called the halving “one of the biggest events in crypto this year”.
But many people are skeptical and consider it just a technical change, launched by speculators to increase the price of digital currency.
Financial regulators have long warned that Bitcoin is a high-risk asset with limited real-world use, although more and more people are starting to accept BTC-linked exchange-traded products. Andrew O’Neill, a cryptocurrency analyst at S&P Global, said he was “a little skeptical about the lessons that can be drawn from previous ‘halvings’ when predicting prices.” According to the expert, it is just one of many factors that can drive Bitcoin’s price.
The “halving” came after Bitcoin’s rally to an all-time high of more than $73,750 in March. The coin also enjoyed a bull run that lasted almost all of 2023, with a strong recovery after a crash in 2022.
Bitcoin and other digital currencies have been supported by excitement around the US Securities and Exchange Commission’s decision in January to approve spot Bitcoin ETFs, as well as expectations that central banks will cut interest rates. But recently, the digital currency has been under pressure amid escalating conflict in Iran and Israel, which has had a ripple effect across capital markets.
