Asset Manager Bitwise Says Market Underestimates Long-Term Impact of Halving
Bitwise Asset Management has issued a word of caution ahead of Bitcoin’s highly anticipated halving, which is set to occur on April 20.
Despite the excitement surrounding this event, historical data suggests that the immediate aftermath may not be as bullish as many anticipate, Bitwise said in a recent post on X.
According to the asset manager, while the month immediately following the halving typically sees a modest drop in price, the subsequent year often witnesses exponential gains.
For instance, following the 2012 halving, Bitcoin experienced a meager 9% increase in the month post-halving, only to skyrocket by a staggering 8,839% over the following year.
Similar patterns were observed after the 2016 and 2020 halvings, with Bitcoin’s price surging significantly in the year following each event.
Market Underestimates Long-Term Impact of Halving
Bitwise’s analysis suggests that the market tends to underestimate the long-term impact of halvings, focusing instead on short-term fluctuations.
This sentiment is echoed by industry experts, who foresee potential challenges in the immediate aftermath of the halving.
Markus Thielen, head of research at 10x Research, anticipates a $5-billion miner sell-off post-halving, which could exert downward pressure on the markets.
Fred Thiel, CEO of Marathon, believes that the anticipated rally following the halving has already been factored into current prices.
Furthermore, recent market indicators have raised concerns about a potential correction.
Trader and analyst Rekt Capital highlighted several significant pullbacks since the 2022 bear market bottom, with corrections ranging from 18% to 23%.
Currently, the market has corrected by 16%, indicating the possibility of further declines.
Here is a list of all Bitcoin pullbacks dating to the Bear Market Bottom of 2022:
• -23% (February 2023)
• -21% (April/May 2023)
• -22% (July/September 2023)
• -21% (January 2023)
• -18% (March 2023)
• Almost -16% currently (April 2023)
Bitcoin needs to hold… pic.twitter.com/IgcpD27Arm
— Rekt Capital (@rektcapital) April 16, 2024
Analyst Cold Blooded Shiller has even suggested that a 30% correction, bringing Bitcoin’s price down to around $51,000, is not out of the question.
Crypto Veterans Bullish on Bitcoin
Crypto.com CEO Kris Marszalek has recently said that Bitcoin may experience some selling pressure in the lead-up to the highly anticipated halving event, but the long-term outlook remains bullish.
While acknowledging the possibility of selling pressure in the near term due to the “buy-the-rumor, sell-the-news” trading phenomenon, he emphasized that the halving will have a significant positive impact on the market in the long run.
“Over a longer period, the halving will make a substantial difference and is a positive development for the market.”
Likewise, Ripple CEO Brad Garlinghouse has predicted that the total market value of cryptocurrencies will double this year, largely driven by spot ETFs and Bitcoin halving.
He believes that the introduction of real institutional money through ETFs is a significant factor contributing to this positive outlook.
“I’m very optimistic. I think the macro trends, the big picture things like the ETFs, they’re driving for the first time real institutional money,” he told CNBC earlier this month.
As of now, Bitcoin is trading at $63,575, largely flat over the past day.
