Bitcoin traders and investors are holding their breath in anticipation of the one-in-every-four-year event when Bitcoin’s new supply is essentially cut in half. This has caused its value to skyrocket in the past. Will the price increase or drop after the next Bitcoin halving, which is expected to happen as soon as tomorrow?
Some experts are bearish on the price trajectory, claiming the coin’s value is unlikely to go up by as much as it has in the past after this Bitcoin halving, considering its recent all-time high.
One of the bears is billionaire Arthur Hayes, who not only doesn’t think Bitcoin’s price will increase but has also warned it could decline after the Bitcoin halving event. He is not alone: according to cryptocurrency exchange Coinbase, it will be challenging for the biggest crypto by market cap to reflect an “upward trend” immediately after the halving. However, it will eventually do so, heralding the start of an extended bull run.
What do the bulls say on Bitcoin halving?
Other experts are convinced a rally is impending. Crypto.com CEO Kris Marszalek told Bloomberg that despite initial selling pressure, the long-term impact of Bitcoin halving on the price will be positive.
Miners are preparing accordingly
Commercial Bitcoin mining operations consume huge amounts of electricity to generate power for the computers used to mine Bitcoin, which is a considerable expense in addition to the equipment. Some experts believe the Bitcoin halving will impact mining profitability because effort and resources will need to double to earn the same rewards as before. The costs may partially be offset if the Bitcoin price appreciates significantly.
Miners have been preparing for the upcoming Bitcoin halving for a while. They have been upgrading their equipment and accumulating Bitcoin so their mining operations can remain as intensive as they are now, even after the Bitcoin halving. For example, Bitfarms recently installed and activated over 5,000 cutting-edge mining devices in Garlock and Farnham in Quebec, Canada.
Price volatility is increasing
On April 17, Bitcoin briefly dropped below $60,000. This happened for the first time in several weeks, indicating rising volatility ahead of the Bitcoin halving. The flagship crypto pared the drop, but not before falling by around 5% to $59,888. It has lost about 18% of its value since hitting its all-time high of $73,797 in mid-March. Dogecoin, Solana, and Ethereum also lost some of their value. Coinbase, MicroStrategy, and other crypto-related stocks traded lower as well.
Is the Bitcoin halving already priced in?
The extended rout is partially prompted by concerns that the market has already priced in the Bitcoin halving given the risk-off investment environment. According to Marathon CEO Fred Thiel, this is precisely the case. He pointed out that the SEC’s approval of 11 spot Bitcoin ETFs drew capital to the market, accelerating the price increase that is normally expected three to six months after each Bitcoin halving.
Indigo Fund cofounder Nathanaël Cohen told the Business Standard that Bitcoin users are looking to lower risk because the actual impact of the Bitcoin halving remains to be seen. More specifically, stakeholders do not know whether it will have any real effect on the market or whether the ETFs will overshadow it. Tension in the Middle East is another factor putting pressure on high-risk assets like Bitcoin.
A wave of liquidations
A wave of digital asset liquidations in long positions sped up the decline in Bitcoin’s price over the last week. On April 12, holders liquidated bullish crypto wagers worth about $780 million within 24 hours. Against the backdrop of the Iran-Israel conflict, Bitcoin declined further as investors turned risk-averse.
Long-term outlook remains bullish
The long-term outlook post-Bitcoin halving remains bullish, with crypto leverage flushed out in the latest retreat, according to some experts. According to FalconX head of markets Ravi Doshi, the broker’s derivatives desk is still seeing longer-dated call buying because customers expect the Bitcoin price to increase in the second half of 2024.
Ripple CEO Brad Garlinghouse is also bullish on Bitcoin’s trajectory. He predicts that the total crypto market cap will double this year, mainly due to the Bitcoin halving and the ETFs.
Bitcoin is trading for around $61,650 at the time of writing.
