The imminent Bitcoin halving, a significant event encoded within the cryptocurrency’s framework, is just two days away. This recurring event, occurring approximately every four years, results in a 50% reduction in rewards for Bitcoin miners. The cryptocurrency community is eagerly anticipating this halving, particularly in light of recent advancements such as the approval of spot Bitcoin ETFs and enhanced crypto regulations.
Anticipation surrounds the 2024 halving, with expectations of widespread repercussions across the financial landscape as retail investors gain exposure to Bitcoin through ETFs. This surge in retail interest could lead to heightened crypto transactions, trading volumes, investments, and speculative activities within the sector, as reported by Finance Magnates. Binance’s countdown indicates that the Bitcoin halving event is on the horizon.
Post-halving, miners typically face a notable decline in revenue. Moreover, the reduced selling pressure could contribute to increased trading volumes and price volatility in the market, according to insights from Finance Magnates. Goldman Sachs has recently advised investors against correlating Bitcoin’s halving with price surges, as reported by Coindesk. The sustained price growth hinges on robust inflows into spot ETFs rather than solely on the halving event.
While historical halvings have often been followed by price appreciations, Goldman highlights the significant influence of various macroeconomic factors. The firm underscores the varying timelines to reach peak values in the past and emphasizes the contrasting macroeconomic landscape during previous halvings characterized by high inflation and interest rates.
Moving forward, Goldman stresses the importance of considering additional factors, such as the adoption of spot ETFs, in influencing Bitcoin’s price trajectory. The recent uptrend in BTC prices, fueled by inflows into U.S.-based spot ETFs, suggests that a substantial portion of post-halving expectations may already be factored into the market.
Fred Thiel, CEO of Marathon Digital Holdings Inc., echoes Goldman’s perspective by indicating that the successful approval of ETFs has accelerated the typical price appreciation observed post-halvings. However, Thiel acknowledges the potential impact of the halving on Bitcoin’s supply dynamics and highlights miners’ optimism towards the impending event.
In recent developments, Bitcoin Cash (BCH) underwent its own halving, resulting in a 15% decline post-event. This occurrence has prompted a reevaluation of expectations regarding an immediate price surge in Bitcoin following its halving, according to Coindesk. Bitcoin Cash, established in 2017, historically reflects Bitcoin’s market sentiment. The recent rally followed by a sharp decline post-halving signals caution surrounding Bitcoin’s upcoming halving.
The decrease in Bitcoin Cash’s price coincided with a plunge in open interest for BCH futures, signaling a shift in market dynamics. Additionally, negative funding rates across major exchanges indicate a potential unwinding of bullish sentiment.
JPMorgan, a prominent investment bank, anticipates a sell-off to $42,000 once the halving fervor subsides. The impending halving-induced reduction in miners’ rewards by 50% could elevate selling pressure, potentially impacting Bitcoin’s price trajectory in the ensuing months.
On the ETF front, the Grayscale spot Bitcoin ETF (GBTC) recently witnessed a substantial decline in holdings, halving from its January trading debut to 309,871 BTC as of April 16, 2024. This outflow significantly affected Bitcoin prices, attributed to the initially high trading fees of GBTC compared to other US spot Bitcoin ETFs.
Contrastingly, BlackRock’s IBIT launched with a competitive fee of 0.25%, experiencing a remarkable surge with holdings increasing by over 10,000% since its inception. Despite the absence of a direct correlation, this surge contributes to the array of significant Bitcoin-related events.
Overall, the total holdings of the ten approved spot Bitcoin ETFs in the US have reached around 862,162 BTC, valued at $54.7 billion as of April 16, 2024. While the decline of GBTC and the surge of IBIT dominate headlines, other ETF providers have amassed substantial holdings, enriching the dynamic landscape of Bitcoin investments.
In parallel, Bitcoin mining profitability has plummeted by 75% over the past three years, attributed to rising operational costs and the impact of halving events on miners’ rewards. The hash price, denoted in dollars per terrahash (USD/TH), serves as a key metric for measuring Bitcoin mining profitability, influenced by various factors including Bitcoin’s price, transaction fees, network complexity, and block subsidies.
Despite historical price surges, mining profitability continues to dwindle, with diminishing returns becoming increasingly apparent. Bitcoin mining operations face numerous challenges impacting profitability, notably high energy consumption, with the process consuming substantial amounts of electricity annually.