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A new report from the largest US-based cryptocurrency exchange Coinbase shows that the impact of the bitcoin halving event on the asset’s performance is still unclear as many external factors play a significant role in market behavior.
While the halving is seen positively as it is believed to increase the potential scarcity of BTC and support its supply-demand dynamics, the movement of the US Dollar is closely watched to get a clear picture of the market reaction. The effects of volatility, interest rates and global liquidity will need to be factored out.
Unclear Effects of the BTC Halving
Bitcoin halvings happen every four years or every 210,000 blocks. During the event, block rewards for BTC mining are reduced by 50%. The first halving took place in 2012, and the next, the fourth, is expected between April and May 2024. Will reduce the block rewards of upcoming BTC from 6.25 BTC to 3.125 BTC per block.
David Duong, Head of Institutional Research at Coinbase, Explained The report notes that with only three halving events, the evidence for market reaction is still limited, as they all coincided with some significant monetary and fiscal developments.
In 2012, the Federal Reserve Board began purchasing mortgage-backed securities and longer-term Treasuries for the third round of quantitative easing (QE3). During the second half of 2016, Brexit exacerbated fiscal concerns in the EU and UK, leading to an increase in BTC purchases. When the third halving occurred in 2020, central banks and governments responded to the COVID-19 pandemic with “unprecedented levels of stimulus,” which increased global liquidity.
“Movements in such factors halving bitcoin price action help to clarify the situation to some extent. However, outside of the third halving, the evidence that these halving events supported bitcoin price action is not entirely clear cut. Yes,” Duong said.
getting a clear picture
Duong further stressed that removing the influence of global liquidity on BTC’s price behavior would reveal a clearer picture of the asset’s performance within different economic regimes.
Duong said that as the next halving approaches, it is important to note that the current surge in global liquidity will obscure the net effect on bitcoin’s price action, as crypto markets track global liquidity movements since the adverse market events that occurred in May. is keeping -June 2022.
“We think it is possible that the next bitcoin halving in 2Q24 could have a positive impact on the performance of the token. However, in our view, the limited supporting evidence makes this relationship still somewhat speculative,” Coinbase Research Head said.
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[ad_1]
A new report from the largest US-based cryptocurrency exchange Coinbase shows that the impact of the bitcoin halving event on the asset’s performance is still unclear as many external factors play a significant role in market behavior.
While the halving is seen positively as it is believed to increase the potential scarcity of BTC and support its supply-demand dynamics, the movement of the US Dollar is closely watched to get a clear picture of the market reaction. The effects of volatility, interest rates and global liquidity will need to be factored out.
Unclear Effects of the BTC Halving
Bitcoin halvings happen every four years or every 210,000 blocks. During the event, block rewards for BTC mining are reduced by 50%. The first halving took place in 2012, and the next, the fourth, is expected between April and May 2024. Will reduce the block rewards of upcoming BTC from 6.25 BTC to 3.125 BTC per block.
David Duong, Head of Institutional Research at Coinbase, Explained The report notes that with only three halving events, the evidence for market reaction is still limited, as they all coincided with some significant monetary and fiscal developments.
In 2012, the Federal Reserve Board began purchasing mortgage-backed securities and longer-term Treasuries for the third round of quantitative easing (QE3). During the second half of 2016, Brexit exacerbated fiscal concerns in the EU and UK, leading to an increase in BTC purchases. When the third halving occurred in 2020, central banks and governments responded to the COVID-19 pandemic with “unprecedented levels of stimulus,” which increased global liquidity.
“Movements in such factors halving bitcoin price action help to clarify the situation to some extent. However, outside of the third halving, the evidence that these halving events supported bitcoin price action is not entirely clear cut. Yes,” Duong said.
getting a clear picture
Duong further stressed that removing the influence of global liquidity on BTC’s price behavior would reveal a clearer picture of the asset’s performance within different economic regimes.
Duong said that as the next halving approaches, it is important to note that the current surge in global liquidity will obscure the net effect on bitcoin’s price action, as crypto markets track global liquidity movements since the adverse market events that occurred in May. is keeping -June 2022.
“We think it is possible that the next bitcoin halving in 2Q24 could have a positive impact on the performance of the token. However, in our view, the limited supporting evidence makes this relationship still somewhat speculative,” Coinbase Research Head said.
Binance Free $100 (Exclusive): Use this link to register and get $100 free and 10% off on Binance Futures for the first month. (terms).
PrimeXBT SPECIAL OFFER: Use this link to register and enter the code CRYPTOPOTATO50 to receive up to $7,000 on your deposit.
