Market analysts are sounding a note of caution as Bitcoin’s much-anticipated halving event approaches, suggesting that it may not necessarily lead to the expected surge in value.
According to insights from Steno Research, the halving could trigger a “sell-the-news” reaction among short-term speculators and purchasers of Bitcoin exchange-traded funds (ETFs) seeking to capitalize on profits.
Bitcoin has undergone three halving events in its history, each time reducing miner rewards. However, Steno Research draws parallels with the 2016 halving, where a surge in selling pressure was observed in the months following the event.
Anticipating a similar pattern this time around, Steno Research predicts a surge in Bitcoin’s value leading up to the halving event, followed by a potential dip below its pre-halving price within the first 90 days afterward.
Analyzing historical data, Steno Research notes that Bitcoin’s price remained below its pre-halving level for the entire 90-day period following the event. This trend is attributed to miners selling off their Bitcoin holdings to cover operational costs, contributing to downward pressure on prices.
Despite the reduction in the number of Bitcoin issued after the halving, the value of this issuance is expected to be high due to Bitcoin’s current trading close to its all-time high. This implies that miners may be inclined to sell off their holdings over time, adding to sell-side pressure and potentially causing price corrections.
However, the report suggests that once the selling pressure from miners diminishes, the halving could serve as a bullish catalyst for Bitcoin’s price.
According to data from CryptoQuant, Bitcoin daily mining rewards are at their highest ever as the price trades close to its all-time high. This implies that even though the number of BTC issued will be the smallest yet, after the halving, the value of this issuance will be high when measured in dollars.
The report explained that with the current price at approximately $71,563, this reduction now translates to $224,512 worth of Bitcoin, compared to the $55,000 the miners received after the last halving.
As of the time of publication, Bitcoin was trading at $71,744.10, marking a 3.7% increase over the last 24 hours.