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We are now just hours away from the Bitcoin halving.
If you still don’t know what that means, now’s the time to clear that up. In short, the issuance of new bitcoin per block is set to drop from 6.25 BTC to 3.125 BTC.
While many analysts and executives have weighed in on what this roughly quadrennial event will spur from a bitcoin price action standpoint, what we know is that nobody knows for sure.
Segment observers have looked at the three past halvings in 2012, 2016 and 2020 for help — though that isn’t exactly a large sample size.
Besides, some have pointed out that this time is different considering the approval of US spot bitcoin ETFs just months before the event. Demand for those products helped fuel a crypto rally and a new all-time high BTC price above $73,000 last month.
Read more: The history of Bitcoin halvings — and why this time might look different
Price to trend up…if history holds
We’ve heard it from many on repeat in recent days, weeks and months: Bitcoin halvings tend to catalyze crypto bull markets.
But Framework Ventures co-founder Michael Anderson noted that previous bitcoin halving cycles suggest the event’s potential impact might not become apparent for 12 to 18 months from now.
“While halvings tend to get plenty of media attention, and also serve as a timely reminder of the importance of bitcoin’s limited money supply, the reduction in supply issuance hasn’t historically had an immediate effect on the crypto markets,” Anderson said.
But as mentioned, pre-halving bitcoin price action broke the mold by hitting a new record just weeks before the event, which Anderson said “implies that old models are likely less reliable.”
“It’s entirely possible that newer, more institutional market entrants that were onboarded through the ETFs are perhaps less jaded and more excited about halvings, and so the timeline for a market upswing might come sooner than expected,” he added.
Everyone knows when a Bitcoin halving is coming, with this one occurring at block 840,000.
One might assume that means the upcoming halving is reflected in bitcoin’s current price. BTC hovered around $64,000 at 1 pm ET Friday — down about 8% from a week ago.
“Digital asset investors and traders constantly ask the question, ‘Is the halving priced in,’ and each cycle it tends to not be,” said Matt Balensweig, head of BitGo’s Go Network.
While bitcoin’s price went up prior to the SEC’s approval of spot bitcoin ETFs in January, it rallied further in the 60 days afterward, he added.
“With the halving, traders might try [to] position themselves ahead of the event,” Balensweig said. “But when the event occurs, there will be less daily supply on the exchange order books, and assuming constant demand, that will again lead to bid-side pressure as the sell-side is thinner.”
The Bitcoin halving is “never priced in,” according to Andreas Brekken, a former Kraken software engineer and founder of SideShift.ai.
Bitcoin ETF investors — many of which are paying attention to the halving for the first time — will be reminded of bitcoin’s scarcity, Brekken noted.
Read more: If you still think bitcoin is scarce, you’re suffering from fiat brain
“It may take months for this realization to sink in fully,” he said. “Based on this, I expect BTC to reach $200,000 in this cycle.”
Short-term uncertainty
Matteo Greco, a research analyst at Fineqia International wrote in an April 15 research note that while previous halving events have historically been followed by nine to 12 months of uptrend, they have typically caused short-term “sell the news” reactions before and after the event.
There has been increased profit-taking among both crypto and traditional ETF investors, he added.
“This natural behavior follows seven months of continuous growth, suggesting the possibility of a downward trend in April or in one of the following months,” Greco previously told Blockworks.
Read more: Why BTC’s record monthly growth streak could be in jeopardy
While LMAX market strategist said he too agrees there is potential for a “sell-the-news reaction” immediate after the halving, such setbacks could proceed a quick rally toward $100,000.
“The main differentiating factor this time around is that we have traditional markets as an audience,” Kruger told Blockworks. “This could alter the trading landscape in the sense that these new market participants will have an opportunity to learn more about bitcoin and its attractive properties that make it so exciting as an asset.”
Samir Kerbage, chief investment officer of crypto asset manager Hashdex, said bitcoin could see a pullback to the mid-$50,000 range. That would fall in line with previous mid-cycle corrections of 30%, he noted.
More bearish still, JPMorgan analysts have said they think bitcoin could drop to $42,000 after the halving.
Optimism over the prospect for bitcoin’s price rising significantly by year-end in part is based on the assumption that spot bitcoin ETFs would continue at the same pace, they noted.
The US BTC fund category, however, has seen net outflows in each of the last five days.
There are also the bitcoin miners to consider.
The halving reduces the per-block rewards they will receive, putting pressure on their profitability. Miners with less access to capital and less efficient fleets are particularly vulnerable, segment observers have said.
Read more: Financial trouble for bitcoin miners: A look back, and ahead as the halving looms
Kadan Stadelmann, chief technology officer of Komodo Platform, said he expects bitcoin could trade “sideways” for three months after the halving due to sell-offs from miners.
But Wes Levitt, co-chief investment officer for Alpha Transform Holdings, argued that miner profit margins are higher than anticipated — meaning more muted sales of their BTC reserves.
He also noted that the combined market capitalization of the largest stablecoins — tether (USDT), USDC and DAI — recently reached a record of about $146 billion.
Levitt added: “With less selling pressure post-halving and cash ready to re-enter the market once halving concerns have passed, BTC price should accelerate quickly.”