It remains uncertain how the upcoming halving will affect Bitcoin’s price behavior, especially with global liquidity appearing to have peaked in the near term.
With the next Bitcoin (BTC) halving anticipated in the second quarter of 2024, there is considerable speculation about its potential impact on the performance of the leading crypto asset and the market in general. However, according to reports, a new Coinbase publication suggests that while halving is often seen as a positive event due to its effect on Bitcoin scarcity and supply-demand dynamics, the true outcome of the next halving episode is not guaranteed.
According to the report’s analyst, David Duong, understanding the market reaction to previous halving events requires careful analysis of various factors, including liquidity, interest rates, and movements of the US dollar.
Although Bitcoin halving is generally regarded as favorable, there is limited evidence from the three recorded events as they were influenced by factors such as global liquidity measures. The crypto exchange believes past historical events are insufficient 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 multitude of factors that contribute to price movements, making it challenging to isolate the precise impact of the halving.
Consequently, it remains uncertain how the upcoming halving will affect Bitcoin’s price behavior, especially with global liquidity appearing to have peaked in the near term.
Retail Demand for Bitcoin Set to Soar Ahead of April 2024 Halving
Despite the uncertainty surrounding the market reaction, JPMorgan Chase, a prominent player in the financial industry, predicts that retail demand for BTC will continue to be strong, leading up to the halving.
This stance underscores the high anticipation and significant interest surrounding the event within the crypto community.
The JPMorgan report in May attributed the surge in retail demand for BTC to the emergence of Bitcoin Ordinals and BRC-20 tokens. The report emphasized that as the halving draws nearer, demand from retail investors for the crypto asset is expected to strengthen significantly.
The company is one of many financial services firm that joined the crypto bandwagon. The bank launched its in-house Bitcoin fund for institutional clients in 2021.
Like JPMorgan, other fintech firms like BlackRock and Grayscale Investments actively participate in crypto. According to a recent report by Coinspeaker, BlackRock has applied to the US Securities and Exchange Commission (SEC) to offer customers a spot bitcoin exchange-traded fund (ETF).
A Look At the Previous Halving Events
The first Bitcoin halving occurred in 2012 after its official launch in 2009. The miner’s block reward was reduced from 50 to 25 BTC at the time. This significant milestone triggered a substantial increase in Bitcoin’s price, propelling the crypto asset into a remarkable bull run. The market witnessed a surge in investor interest, driving BTC’s value to new heights and solidifying its position as a king coin.
he second event took place in 2016, reducing the block reward from 25 to 12.5 BTC. Similarly, this halving had a profound impact on the Bitcoin price trajectory. The crypto asset experienced an impressive surge following the event, surpassing previous all-time highs. Market sentiment was overwhelmingly positive, fostering a period of significant growth for Bitcoin.
Most recently, in May 2020, the crypto community witnessed its third Bitcoin halving, which further reduced the block reward to 6.25 BTC.
Despite the challenging circumstances presented by the global pandemic, Bitcoin showcased resilience and embarked on a remarkable rally. The rally led to Bitcoin reaching unprecedented price levels of nearly $70 000 in 2021, captivating the attention of investors worldwide.