Bitcoin halving could be a ‘sell-the-news’ event, at least for a few months

Crypto traders believe that the Bitcoin halving in 2024 will be a crucial turning point for the market. But Steno Research experts predict that it will follow the pattern of “buying before an event based on anticipation, selling after the event when the news has been digested.”

In Bitcoin’s past, there have been three significant reductions in the rewards given to miners. The first reduction occurred in 2012, decreasing the reward from 50 Bitcoins to 25 Bitcoins. This was followed by another reduction in 2016, which lowered the reward to 12.5 Bitcoins. Most recently, on May 11, 2020, the reward halved once again, now amounting to 6.25 Bitcoins.

According to Steno Research’s analysis, Bitcoin may experience a price pattern similar to the one seen after its 2016 halving. In this scenario, selling pressure could build up and last for approximately four months following the event.

The research firm predicts that the upcoming Bitcoin halving may follow a similar pattern as in 2016, where investors buy cryptocurrency in advance based on rumors, only to sell it once the news of the event has been announced, leading to a potential price drop. This trend could be amplified by the heightened anticipation from holders of Bitcoin ETFs (Exchange Traded Funds).

According to Steno Research, Bitcoin’s value is projected to increase significantly before the halving occurs. But it’s important to note that within the initial 90 days after the halving, Bitcoin’s price might temporarily drop below its value at the time of the event.

Steno Research analysts found that the price behavior of Bitcoin before and after the 2016 halving showed similar patterns. This suggests that we might anticipate comparable results following the upcoming halving event.

After the Bitcoin halving, the report indicated that its price failed to surpass its previous level for a full 90-day period. In simpler terms, on the 90th day post-halving, Bitcoin was valued 8.4% less than before the event took place. (Mads Eberhardt, Steno Analyst)

Based on information from CryptoQuant, the daily rewards for Bitcoin mining are currently at an all-time high since the price is nearly touching its record peak. Consequently, even though the next Bitcoin issuance following the halving will be the least in quantity, the value of this new supply when measured in dollars will be significant.

With a current price of around $71,563, this price drop means that $224,512 in Bitcoin value is lost, contrasting the $55,000 earned by miners following the previous halving.

“Bitcoin miners have never earned as much as they have in recent months.”

Miners typically sell off their Bitcoins gradually to meet the expenses of their mining activities, according to the report. Consequently, this selling action puts downward pressure on Bitcoin‘s price and triggers corrections several months following a halving event.

Additionally, the report pointed out that the Bitcoin halving serves as a positive catalyst for its price increase when mining sell-off pressure lessens.

Eberhardt said,

“We believe the real bullish momentum of the halving will become apparent once the initial market adjustments have settled, and the “weak hands” – those investors who bought in anticipating quick gains, including some ETF investors – have exited.”

An analyst named Alex Wice expressed the view that the upcoming Bitcoin halving will lead to a significant price surge, despite being well-known among investors. He explained that the market may not have fully factored in this event yet.

“Not enough leverage longs can match the tsunami of FOMO buyers if this fully sends.”

The CEO of Bitget Wallet anticipates some market fluctuations immediately following the Bitcoin halving. However, he believes the optimism sparked by this occurrence may result in increased attention and expansion within the broader Web3 community.

At the time of publication, Bitcoin was trading at $71,563, up 3.8% over the last 24 hours

2024-04-09 00:11

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