What Will Happen to Bitcoin Prices After the "Halving"?

Overall, bitcoin prices have risen 54 percent so far this year and have risen 136 percent since the last 52 weeks. Bitcoin's market capitalization currently reaches 1.28 trillion US dollars. The more institutional investors enter this crypto asset, the stronger the price will be. The market is increasingly confident in this investment asset. However, crypto asset enthusiasts certainly wonder, what will happen after the halving? There are many analyzes and opinions about this.

Analysis in Bobsguide states, although there are expectations that the halving will stimulate the market to experience bullishness again, a number of market analysts, including from JPMorgan Chase & Co and Deutsche Bank AG, are of the opinion that the event has been priced in by the market.

”While bitcoin prices have remained relatively stable post-halving, transaction fees on the network have spiked, signaling increased activity,” said Kok Kee Chong, CEO of AsiaNext, a Singapore-based digital asset exchange. Each halving will reduce the dilutive impact of mining. With the upcoming cycle, only 3.3 percent of the new bitcoin supply is expected to be generated, a stark contrast to previous cycles.

Also read: Prices above IDR 1 billion, Bitcoin is getting stronger

In fact, the sentiment of increasing the value of bitcoin may be hampered by macroeconomic factors, such as signals from the Federal Reserve to raise interest rates and Iran-Israel geopolitical tensions. People will look for safer and more profitable investments. However, market fluctuations in the near future could occur when ETF funds (investment products such as mutual funds that include bitcoin in an investment basket) flow into the market so that the price of bitcoin increases.

Another analysis from JP Morgan Chase & Co published in Markets Insider said, after the Bitcoin halving, crypto asset holders should not bet and hope for a faster price increase. JP Morgan even said that the price of the world's largest cryptocurrency could fall immediately after this event. They also saw that the market had anticipated this event so widely that it could bring the crypto asset to a record high in 2024.

”We do not expect an increase in bitcoin prices post-halving because it has already been calculated. In fact, we instead see a decline in bitcoin prices post-halvingfor several reasons,” analysts led by Nikolaos Panigirtzoglou said in a note this week.

JP Morgan said the bitcoin market remains in overbought territory after surging to a record high in March. Panigirtzoglou previously put forward several indicators that confirm this. JP Morgan also observed that venture capital funding remains low despite the crypto market's recent resurgence. This is another obstacle to possible price increases.

As the bitcoin blockchain has made it through the past halving without interruption, attention is now turning to the next halving, which will be in 2028, when the rewards will be even less. With an estimated 64 halvings before hitting the 21 million cap, miners face reliance on transaction fees as a main revenue source in the future.

Great sales

Meanwhile, Forbes said bitcoin prices have so far ignored warnings that a bitcoin halving could trigger intense selling, bouncing back to below $60,000 per bitcoin. Currently, bitcoin miners and traders are grappling with the halving “chaos,” which has raised bitcoin transaction costs to “unprecedented” levels. One of the comments that appeared on social media was, this year's halving was highly anticipated, as usual halving occurs, but experienced a few incidents that required further explanation.

Markus Thielen, founder of 10x Research, on the Coindesk page, said that the Bitcoin halving was not a bullish event and warned of market weakness over the next few months with the potential for a deeper correction. The main reason is that miners released their bitcoin holdings worth 5 billion US dollars to keep operations stable after their income was cut.

However, in the longer term, the Decrypt page says, the last three halvings were followed by exponentially higher bitcoin price movements 50-100 days after the event. Crypto asset trading company QCP Capital said that if this pattern repeats itself this time, Bitcoin bulls still have several weeks to build a larger buying position.

Dessislava Aubert, research director at crypto asset analysis firm Kaiko, warns, remember 2020? It's important to note that Bitcoin's third halving comes as monetary policy is extremely loose at a time when central banks are grappling with a pandemic-era slowdown that threatens to disrupt the global economy.

“The Fed is easing. "For me, the main difference compared to the most recent halving, which occurred in 2020, is the macro environment," he said ahead of last week's halving. When the US consumer price index soared in 2022, the Federal Reserve stepped in and raised interest rates at a breakneck pace to control inflation. Currently, monetary conditions are relatively tight and the market moves based on expectations of when the Fed will lower interest rates and by how much.

"There are many concerns that the Fed will cut interest rates less than three times this year. This will have a negative impact on risky assets and may also affect bitcoin," he said.

Can change

From various analyses above, it appears that the increase in bitcoin prices that affects the movement of other crypto assets will not happen in the near future. Amidst expectation of an increase, macroeconomic and geopolitical developments can break that hope. Another indicator is the lack of increase in funding for crypto asset start-ups. This information indicates that there is no great hope among them that investing in crypto assets has yet to attract them. Everything can change.

Apart from all that, there is another problem. The recent bitcoin halving has shone a spotlight on the popular cryptocurrency and raised new questions about the environmental impact of the crypto world. Mining popular cryptocurrencies requires enormous amounts of energy, and a dwindling supply of bitcoin will spur those goal-centric operations to work even harder.

Fast Company warns that this makes environmental observers and some politicians worried that the impact of crypto mining on the climate will become even greater. Just like artificial intelligence that puts greater pressure on the power grid and extreme weather events that push some countries to their limits in handling them.