June 29, 2023
What to Expect During Bitcoin's Next Halving
Dear Subscriber,
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| By Jurica Dujmovic |
Since its last halving in 2020, Bitcoin (BTC, “A-”) experienced a drastic evolution. Now, stakeholders from every corner of the globe are bracing themselves for BTC’s fourth halving in 2024.
You see, every four years, BTC undergoes a halving event, where the quantity of BTC produced every 10 minutes is reduced by half.
Indeed, these Bitcoin halvings are pivotal moments for both traders and investors, as they are renowned for their innate ability to constrict the inflow of new BTC into the market. This can potentially push prices upward in the face of persistent demand.
For more details on the significance and impact of BTC halvings, I recommend checking out my colleague Bruce Ng’s recent article.
However, as with any economic event, nothing is set in stone. In this dynamic world where current global, political, socioeconomic and market conditions can unpredictably shape the cryptocurrency landscape, the effects of the 2024 Bitcoin halving may unfold in unprecedented ways.
To see what the April 2024 halving has in store for us, I’ve gathered the insights and predictions of several crypto experts and connoisseurs.
My first guest is Ruadhan O, who is a Forbes Business Council member, web3 developer and creator of Seasonal Tokens.
He delved deep into the implications of the upcoming Bitcoin halving, taking into account the potential impacts of recent applications for spot Bitcoin exchange-traded funds by financial heavyweights such as BlackRock (BLK). He speculated that these developments — pending regulatory approval by the U.S. Securities and Exchange Commission — could lend a novel dimension to the 2024 Bitcoin halving.
Particularly, Ruadhan highlighted the historical context where demand from retail investors post-halving has triggered explosive bull markets.
Now that institutional investors have been added to the mix, the next halving event might witness a critical change. In fact, it could bring a transformative shift to Bitcoin’s market dynamics.
Institutional investors have the potential to contribute to Bitcoin scarcity, Ruadhan explains, especially with the advent of spot ETFs. If these spot ETFs are approved by the SEC, they could allow institutional investors to purchase actual Bitcoin, intensifying the supply-demand tension right before the cryptocurrency enters a period of heightened scarcity post-halving.
In fact, our own Alex Benfield touched on this potential yesterday.
Looking forward, Ruadhan confidently projects a bull market in the second half of 2024, driven by the simultaneous conditions of reduced supply and elevated demand if institutional investors stay on the sidelines.
However, he argues that the market reaction could be significantly different if institutions get involved, given their deeper pockets and resistance to market euphoria compared to retail investors.
According to Ruadhan, the historically observed delay between the halving event and the price increase might be shortened due to faster acquisition of BTC by institutional investors, thereby creating a sharper price ascent.
But this institutional involvement might also curb the size of the ensuing bubble, as these investors might start selling once they believe the price has surged excessively. This could potentially mitigate the degree of market volatility.
Next up, Ryan Grace of TastyCrypto echoed Ruadhan's sentiments regarding the impact of institutional investors. However, Grace highlighted an important difference: The potential of Bitcoin futures ETFs to act as a catalyst for institutional investors.
He suggested that futures ETFs, although not contributing to Bitcoin scarcity directly, can still cause a ripple effect in the market by showcasing institutional trust in the asset. This, in turn, could boost retail confidence and contribute to a price surge post-halving.
Similarly, Alexander Wermescher — founding partner and CEO at CLC & Partners — believes that the fundamental economic principle of supply and demand may drive prices up.
However, Wermescher cautions that black swan events, which are unpredictable by nature, can significantly influence Bitcoin prices. This view is reinforced by the 2020 pandemic, which combined with the last halving event, sparked a considerable increase in Bitcoin prices.
Indeed, the unpredictable nature of black swan events, such as the 2023 banking crisis, can exert profound effects on the volatile cryptocurrency landscape. In the face of such crises, Bitcoin's value could increase due to its potential stability against centralized bodies.
However, these crises could also trigger stricter capital controls or restrictions on cryptocurrencies, negatively impacting Bitcoin's price. Wermescher notes that the upcoming changes in U.S. interest rates — as well as regulatory shifts in the U.S. and EU — may further influence the valuation of cryptocurrencies.
As we delve deeper into the intricacies of Bitcoin halving, market sentiment and speculation also emerge as pivotal factors. If the predominant belief is that Bitcoin's price will surge post-halving, it could potentially amplify demand and catalyze a price hike.
Interestingly, while Bitcoin whales play a significant role in driving prices, Wermescher highlights that the majority of Bitcoin is held by entities owning fewer than 1,000 Bitcoins. This suggests that the power of the majority shouldn’t be underestimated.
Another critical aspect highlighted by Wermescher is the potential influence of BTC’s halving on altcoins. Major events like halving and price movements associated with Bitcoin often dictate the trends of the entire market because of BTC’s dominant market position.
Therefore, a potential price increase of Bitcoin post-halving might positively affect altcoins too.
Additionally, Wermescher also shed light on the expected increase in volatility as we approach the 500-day window before the halving — a period that could present lucrative opportunities for short-term traders.
Last but not least, my final guest is Tim Frost, CEO of Yield App. He commented on the growth and evolution of the crypto industry since the last halving, highlighting significant occurrences such as the regulatory actions against major exchanges like Coinbase (COIN) and Binance and BlackRock’s application for a Bitcoin ETF.
According to Frost, while each halving has historically triggered a bull run, this upcoming one could be a turning point.
Just like Wermescher, Frost also brings attention to the repercussions of regulatory actions against the crypto industry, which might potentially influence the outcome of the next halving. Moreover, he addresses the uncertainty surrounding the future relationship between regulators and institutional giants, given the increased focus on crypto.
There you have it.
Most experts I’ve interviewed foresee a price increase due to the 2024 Bitcoin halving, influenced by institutional involvement and market fundamentals. However, the extent of this increase and potential volatility remains uncertain due to factors such as regulatory changes and unforeseeable events.
Now, over to you. Do you agree with the majority consensus of the experts? What surprises do you think this next halving has in store for us?
Please take some time to mull over these questions — and any others you might have — and join us on July 7 for our inaugural episode of “Into the Cryptosphere.” This is a monthly Twitter Spaces call where your thoughts and perspectives can take center stage.
We will be going live on the official Weiss Crypto Twitter account. I will be there moderating the call and will be joined by two of our in-house crypto experts: Alex Benfield and Chris Coney.
To be clear, our discussions will not be limited to the potential impacts of the 2024 Bitcoin halving. This call will also encompass the latest trends, exciting innovations and breaking news in the expansive universe of cryptocurrencies, non-fungible tokens and DeFi.
If you’re interested, make sure to follow us on Twitter @WeissCrypto, where we will soon announce the exact time of this livestream.
Whether you're a veteran trader, a savvy investor or a curious newcomer to the world of digital assets, "Into the Cryptosphere" offers you the opportunity to gain insights from our experts and other leading industry voices, while also engaging in enlightening discussions.
We look forward to hearing your perspectives. So, come ready to share and explore with us on July 7 as we navigate the thrilling twists and turns of the cryptosphere together!
Best,
Jurica
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