The question of whether Bitcoin’s halving is priced is continually asked every time the halving is carried out – often with little resolution. Yet, according to Coinbase analysts, there is a data point that justifies its price being fixed at this time.
“This is the first halving cycle in which bitcoin has broken its pre-halving all-time high, which could mean the effect has already been priced in by savvy traders,” said Coinbase analysts David Duong and David Han in a note sent to The. Block.
However, the analysts also added that there is still a collective belief that the halving could drive up prices, “which could lead to behavior leading to a rally.”
The planned bitcoin halving is expected to take place between April 16 and 22 this year, according to The Block’s halving countdown.
For much of the past few weeks, the price of Bitcoin has hovered around $70,000. However, on Tuesday, the price fell sharply to the $65,000 range.
Sergei Gorev, head of risk at YouHolder, acknowledged that any potential appreciation in bitcoin’s value resulting from the halving may have already been priced into the market. He added that the recent decline in Bitcoin price could indicate that traders are taking profits in anticipation of increased volatility leading to the upcoming halving event.
“As the next Bitcoin halving approaches, current quote dynamics actually indicate that more and more crypto holders believe that the halving is already priced in. Tuesday’s price drop means investors are taking profits before the event However, so far, the “downward movement looks more like a correction than a trend,” Gorev told The Block.
The impact of macroeconomic factors
A recent report of Coinbase Institutional also noted that predicting bitcoin price appreciation after the halving event is problematic because there is “only a small sample of only three previous halvings, making it difficult to predict definitely what to expect.”
Duong said the main impact of the halving could be the attention it brings to bitcoin, as well as other contextual factors such as market sentiment and adoption trends.
Duong noted that Bitcoin’s current rally is largely the result of new phenomena, such as ETF spot inflows and growing institutional interest. The analyst said these factors have “irrevocably changed” the Bitcoin market.
“This means that Bitcoin’s response to the next halving will not necessarily reflect its performance in previous cycles,” he added.
The Upcoming Bitcoin Halving Event
Every four years, a mechanism coded into the bitcoin blockchain halves the block reward earned by miners.
This time around, that means that each new block of Bitcoin mined approximately every ten minutes will yield $3,125. BTC
-4.80%
down from the current block reward of 6.25 BTC.
Historically, much of Bitcoin’s gains have occurred in the 12 to 18 months following a halving, when declining supply was accompanied by increasing demand. For example, at the time of the halving in 2020, one bitcoin cost less than $10,000. By the 2022 peak, prices had soared to over $67,000.
What’s different in this case is that demand has increased since the arrival of 11 spot Bitcoin ETFs. However, as Coinbase noted, the gains may have already been made.
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