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Report Suggests Bitcoin Halving Market Effects May Be Overblown

2 mins
Updated by Geraint Price
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In Brief

  • Coinbase says it is not sufficient to look at previous halving to predict Bitcoin (BTC) 2024 price movements.
  • BTC's next halving will occur in the spring of 2024.
  • If BlackRock's recent ETF application succeeds, the product could inject much needed liquidity into crypto markets.
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Coinbase suggested the 2024 Bitcoin (BTC) halving’s effect on the market is unpredictable with the asset trading in a relatively shallow market.

The company said in a Wednesday report that a coherent bullish narrative is complicated by Bitcoin’s current liquidity and US dollar strength.

ETF Approvals Could Inject Needed Liquidity

It said that while markets expect the promise of future scarcity to impact Bitcoin’s price positively, previous reductions in the asset’s emission rate do not offer any obvious patterns.

A recent spike in liquidity does not provide much insight into an event only set to happen in spring 2024.

After the halving, miners’ rewards for solving a transaction block’s hash fall to about 3 BTC. Halvings occur roughly once every four years and contribute to Bitcoin’s merit as a deflationary asset. 

Inside sources revealed earlier today that asset manager BlackRock intends to apply for a Bitcoin Exchange-Traded Fund (ETF). The company reportedly intends to use Coinbase as an institutional custodian. 

If approved, the new ETF and potential pension fund Bitcoin allocations may inject much-needed liquidity into markets at the right time for the halving. Bitcoin market-depth suffered after the collapse of notable market maker Alameda Research.

The US Securities and Exchange Commission is currently fighting Grayscale Investments in court after rejecting the asset manager’s request to convert its Grayscale Bitcoin Trust (GBTC) to an ETF.

A victory for Grayscale could also partially alleviate Bitcoin’s illiquidity by allowing concerned shareholders to redeem GBTC shares.

Read more here about crypto arbitrage trading.

GBTC share redemption could boost Bitcoin liquidity ahead of halving.
GBTC Shares Discount to Net Asset Value | Source: YCharts

Redemptions will also allow the trust shares to regain parity with spot Bitcoin prices.

Bitcoin Will Benefit From SEC’s Hard-Nosed Approach

The SEC previously refused previous spot Bitcoin ETF applications, citing potential manipulation of the underlying market. It has approved several Bitcoin futures products from ProShares and VanEck, among others.

The agency sued Coinbase earlier this month for running as an unregistered broker-dealer in the US. This lawsuit could a potential mitigating factor in BlackRock’s ETF application. 

Bitcoin bull Michael Saylor said Bitcoin’s dominance of crypto would skyrocket and emerge the winner from the SEC’s crackdown. Speaking in a recent Bloomberg interview, the MicroStrategy Chairman said,

“The dominance of Bitcoin and the crypto economy has moved from 40 to 48% this year alone, but I think that as the stablecoins and the tokens go away, that long-term dominance is headed for 80%.”

For BeInCrypto’s latest Bitcoin (BTC) analysis, click here.

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David Thomas
David Thomas graduated from the University of Kwa-Zulu Natal in Durban, South Africa, with an Honors degree in electronic engineering. He worked as an engineer for eight years, developing software for industrial processes at South African automation specialist Autotronix (Pty) Ltd., mining control systems for AngloGold Ashanti, and consumer products at Inhep Digital Security, a domestic security company wholly owned by Swedish conglomerate Assa Abloy. He has experience writing software in C,...