All eyes are on the Bitcoin halving scheduled for mid-April 2024. This reduces the reward given to miners for validating transactions by half. This is the fourth halving event in Bitcoin's history.
Despite the current market slump, Bitcoin has seen significant growth of over 150% since mid-October last year. According to Coinbase's latest “handbook,” this strong performance will continue until the next halving.
Coinbase warns of limited historical evidence
Coinbase noted that while the halving could have a positive impact on Bitcoin's performance, there is limited historical evidence supporting this relationship, making it somewhat speculative. Furthermore, Bitcoin's price is influenced by factors beyond cryptocurrency-specific events such as halvings, showing that Bitcoin does not work in isolation.
It's clear that a significant portion of Bitcoin's recent surge was driven more by optimism around spot Bitcoin ETFs than excitement surrounding the halving. Looking ahead, Coinbase said there are several macroeconomic factors that could have a significant impact on Bitcoin prices.
Coinbase expects the US Federal Reserve to begin lowering interest rates as early as May, and begin tapering its quantitative tightening program soon after.
The handbook also warns of the potential for increased selling pressure from miners who may sell large portions of their fees and from companies emerging from bankruptcy, including former crypto finance companies Celsius Network and Genesis Global. did.
Bitcoin on-chain analysis
After evaluating on-chain analysis, Coinbase observes that the current cycle closely mirrors the period from 2018 to 2022, during which time the leading crypto assets experienced a 500% increase from their lowest point. I recorded it.
The handbook also shares some interesting observations about the total supply of Bitcoin held by long-term investors, individuals who hold the cryptocurrency for at least 155 days. Historically, this period indicates a marked decline in the likelihood that these assets will be sold.
Assuming all other factors remain constant, Coinbase predicts that long-term holders are expected to be less likely than short-term holders to view a halving as an opportunity to take advantage of market strength by selling. Stated.
