As the next Bitcoin halving event approaches, the cryptocurrency market is buzzing with expectations. This highly anticipated event, scheduled to occur around April 20 or 21, has historically been associated with significant price increases for Bitcoin (BTC). However, a recent report from cryptocurrency exchange Coinbase presents a mixed bag, suggesting a potential conflict between the halving’s bullish impact and typical seasonal trends.
What will halving mean for Bitcoin?
According to Coinbase’s market commentary on April 5, the halving, which halves the reward for new Bitcoin mining, may indeed be a catalyst for higher prices. However, the report warns that this potential increase may be countered by the traditional weakness of the crypto market at this time of year. Historically, Bitcoin has exhibited a much lower average monthly return (around 2.7%) from June through September compared to the rest of the year (around 19.3%).
This seasonal decline poses a challenge for investors hoping to benefit from the halving’s potential price increase. Data from Brave New Coin paints a clear picture of this historical trend and suggests that the coming months may reduce the usual impact of the halving. While the price increase may be tempered by seasonality, Coinbase’s report identifies a potentially positive long-term trend: the growing acceptance of Bitcoin as a form of “digital gold.” This increased recognition could attract a new wave of investors, boosting demand and potentially mitigating the impact of the seasonal slump.
Halving history in BTC: What happened in the last halving?
Further strengthening this optimistic outlook, the report highlights the diminishing likelihood of significant price declines. As more investors enter the market, any temporary price declines are expected to be met with aggressive buying, preventing the sharp declines seen in previous cycles. The report also highlights the historical correlation between halving events and price increases. Following the May 2020 halving, Bitcoin witnessed a dramatic rise, rising from $8,787 to nearly $69,000 as of November 2021. This historical precedent gives hope for a similar price increase following the upcoming halving.
Meanwhile, as we reported as Kriptokoin.com, the US Court of Appeals ruled in favor of Coinbase. This decision confirms that secondary cryptocurrency sales on the Coinbase platform do not violate securities laws. It also potentially paves the way for broader institutional adoption of cryptocurrencies. As a result, the upcoming Bitcoin halving presents a fascinating scenario. While the potential for price growth exists, seasonal weakness is also a problem. Ultimately, only time will tell how these opposing forces will shape the future of the cryptocurrency market.
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