Bitcoin Halving 2024: ‘I Think This Is a Buy-the-News Event if You Pan Out Long Term’, Says Bitwise CIO

On CNBC’s “Squawk Box” show today or yesterday, Matt Hougan, Bitwise Asset Management’s Chief Investment Officer, talked about the upcoming Bitcoin halving and its possible consequences for the cryptocurrency’s price. In his opinion, this occurrence might lead to a strong Bitcoin price increase within the next twelve months.

Based on history, he thinks that although the initial impact might be limited, there could be significant growth following a halving event.

Based on historical analysis, the price of halving events has typically seen significant rallies within the subsequent year.

Historically, Bitcoin’s price has significantly increased in the long term after undergoing a halving event. Let’s examine the data from previous halvings:

— Bitwise (@BitwiseInvest) April 16, 2024

In the ongoing discussion about Bitcoin’s function as a store of value, considering recent political conflicts, Hougan highlighted the intricacies that impact Bitcoin’s price. Factors such as ETF demand, tax-induced selling, and geopolitical events all play a role. Although it can be tempting to focus on short-term price movements, Hougan advises taking a more comprehensive view. He stresses Bitcoin’s ability to protect against inflation and serve as a shield against geopolitical instability as it develops.

Hougan emphasized that US-traded Bitcoin ETFs have brought about a momentous change for institutional investors by making it simpler to invest in Bitcoin. He pointed out that institutions like endowments, advisors, and family offices find it more convenient to invest via ETFs than directly purchasing on trading exchanges. This convenience has led to a substantial increase in institutional investment in Bitcoin, which aligns with both the sudden surge in demand from the ETF debuts and the reduced supply due to the halving event.

Moving forward, Hougan expressed confidence that a Bitcoin ETF on Ethereum could gain approval in the US within the next year. Nevertheless, he emphasized that Bitcoin’s near future is particularly promising. Major financial institutions are predicted to introduce Bitcoin access in the upcoming periods, which may lead to increased institutional interest and further price support for Bitcoin.

In their research study titled “The Bitcoin Halving: A Programmatic Monetary Policy,” authors Juan Leon and Matt Hougan from Bitwise Asset Management explore how Bitcoin’s halving events influence its pricing trends and mining community. The scholars delve into the scheduled reduction of Bitcoin rewards for miners, which happens roughly every four years, with the objective of slowing down the production of new Bitcoins to create scarcity and possibly boost its worth.

Leon and Hougan explain how the bitcoin halving is a crucial part of Bitcoin’s monetary policy, comparing it to the supply mechanisms of precious metals like gold. In this analogy, a decreasing supply paired with consistent demand can lead to price increases. The authors delve deep into past halvings and make predictions about potential market responses. Despite being scheduled and predictable, market reactions are complex, combining logical and speculative behaviors, which frequently diverge from expectations.

The research results show that before a Bitcoin halving, there is typically a trend of rising prices followed by a correction in the immediate aftermath. But over the longer term, these halvings have consistently led to substantial price increases for Bitcoin, as seen in the significant price growth observed in the year following each event.

After a halving event, the earnings from Bitcoin mining are reduced by half. Consequently, this reduction in profits forces miners to find ways to streamline their operations and come up with new technological advancements. Over time, these adjustments could lead to an improved and more efficient Bitcoin mining network.

In addition, Leon and Hougan explore the wider consequences of Bitcoin’s halvings. These impacts encompass changes in market liquidity, trading patterns, and the growing influence of institutional investors. They suggest that each halving signifies a significant advancement in Bitcoin’s market development, moving it from a speculative to a more investment-driven phase.

The study also explores the emotional and theoretical perspectives related to halving occurrences. It is important to recognize that while such events may ignite speculative frenzies, discerning the difference between hype and genuine market catalysts – such as increasing adoption rates and advancements in technology – is essential.

In conclusion, the relationship between Bitcoin’s halvings and regulatory frameworks is examined, advocating for regulations that foster innovation yet prevent market manipulations. Such a harmonious strategy is vital for Bitcoin’s market to thrive during halving occurrences.

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2024-04-19 16:39