AssetsJun 20, 2023

The impact of Halving on the price of Bitcoin is unpredictable, according to a Coinbase report

According to a report from a well-known digital currency trading platform, obtaining a clear prediction of the reaction of the cryptocurrency sector to Halving would require the analysis of several external factors.

A report published by the American digital currency trading platform tries to determine the market reaction to the next Bitcoin network having and its impact on the price of the oldest of digital currencies. It is worth being aware that this event is usually very positively perceived by investors related to the cryptographic industry. In short, these traders are counting on the increase in the value of Bitcoin, basing their expectations on the law of supply and demand.

Historical data on the impact of Halving on price is limited

The system architecture of the oldest cryptocurrency is designed in such a way that halving is carried out in the Bitcoin network every 210,000 minted BTC block. This means that it takes place roughly every 48 months at the current rate of block mining. During these characteristic events permanently inscribed in the history of the oldest digital currency, the reward that miners receive for performing their work related to mining and adding a block to the blockchain is halved.

From a historical point of view, the case is that the first Halving on BTC took place in 2012. The next one took place in 2016, and the last such event took place in 2020. According to rough estimates, the next Halving will most likely take place in the first half of 2024. It is due to this fact that the block reward miners receive will decrease from 6.25 BTC to only 3.125 BTC.

The analysis of the situation on the BTC chart in the context of the upcoming Halving was looked at by the head of institutional research at Coinbase - David Duong. The analyst explained in his latest report that with only three Halving events from a historical perspective, possible evidence on market reaction is still very limited. Each of these events that took place in the near or distant past took place with some monetary and fiscal changes in the background.

For example, in 2012, the Fed board began an intensive process of buying mortgage-backed securities. Around the same time, the US regulator decided to purchase long-term government bonds as part of the third round of quantitative easing. During the second halving that took place in 2016, Brexit raised significant fiscal concerns in the EU and the UK. Therefore, this situation has led to increased interest in the potential of BTC. In turn, in 2020, the COVID-19 pandemic played its role. Sudden and unpredictable actions of governments and central banks of many countries led to the fact that investors began to transfer their funds towards cryptocurrencies, especially Bitcoin.

“We strongly believe that it is possible that another Halving of the oldest cryptocurrency that will take place around the first half of 2024 can have a definitely positive impact on the performance of the Bitcoin network. However, the limited evidence for this state of affairs determines that this chain of cause and effect is still somewhat speculative,” noted David Duong.

Currently, the oldest of the digital currencies changes hands around USD 26.8 thousand. Since its ATH from 2021, it has become cheaper by about 60%.