Analysts Caution of Possible “Sell-the-News” Scenario for Bitcoin Halving in 2024
Bitcoin’s highly anticipated halving event, set to occur in just 9 days, is generating excitement among crypto enthusiasts worldwide. However, analysts at Steno Research are warning of a potential “sell-the-news” reaction, a pattern observed in previous halving events.
In the past, Bitcoin has experienced three halving events, each resulting in a 50% reduction in miner rewards. The most recent halving in May 2020 led to rewards dropping to 6.25 BTC per block, and analysts expect a similar outcome this time around. Drawing parallels to the 2016 event, analysts at Steno Research predict a possible sell-off following the halving, similar to what has happened before.
Leading up to the event, analysts anticipate a surge in Bitcoin’s value. However, they caution that prices could decrease below pre-halving levels within the first 90 days following the event, with an observed 8.4% decrease. Historically, short-term speculators and Bitcoin ETF purchasers have taken advantage of these events to secure profits.
Data from CryptoQuant shows that Bitcoin’s daily mining rewards are currently at record highs, coinciding with the cryptocurrency’s near-all-time high price. Despite the decrease in newly issued BTC after the halving, the overall value of these rewards remains substantial. However, Steno Research notes that miners may gradually sell their Bitcoin holdings to cover operational costs, putting downward pressure on prices post-halving.
Analyst Alex Wice also weighed in on the halving, suggesting that it could lead to a repricing that sends the price skyrocketing. Wice argues that even though market participants are aware of the event, it is never fully priced in, potentially leading to a surge in demand from FOMO (fear of missing out) buyers.
Despite short-term volatility, analysts maintain a positive outlook on Bitcoin’s long-term prospects. They believe that once the initial market adjustments settle, the halving could act as a bullish catalyst for Bitcoin’s price, sparking renewed interest in the broader cryptocurrency ecosystem.