The Bitcoin Halving Countdown: Insights from Key Industry Leaders on the Upcoming Event

My study suggests that predictions based on historical precedent might not be very useful here because of the small sample size and because we now have ETFs as an anchor for demand.

But that’s not to say that the Bitcoin price reaction post-halving won’t still be positive – it’s just a matter of causality. We believe the technical setup may still be positive as there is still a lot of capital waiting to be deployed via these ETF products, the macro environment seems favorable, and the sentiment is high.

In our view, the post-halving miner economics could increase selling pressure on miners, as you say, as margins narrow and less excess profit can be retained in Bitcoin. However, this may not immediately impact markets. As the rate of Bitcoin issuance drops, the absolute number of Bitcoins that miners can sell also drops – even if they are selling a proportionally higher amount of mining rewards.

Miners have also been selling their reserves and fundraising via other means to build liquidity in preparation for a revenue squeeze.

Longer-term, thinner margins could result in a larger proportion of forced selling by miners in order to meet fixed operational and financing costs, making some miners unprofitable and increasing consolidation by well-capitalized entities who are able to acquire distressed assets at a discount.

But keep in mind that if some miners go offline, it could cause the overall network hashrate to decline and make mining easier. By lowering the mining difficulty, the remaining active miners could see their cost per coin decrease. That maintains a stable equilibrium as the difficulty adjusts to preserve incentives for miners to participate and secure the blockchain.

The Bitcoin halving reduces supply, potentially leading to increased prices if demand remains the same. However, current price peaks may already reflect this factor and are driven by more influential factors, such as the spot Bitcoin ETF approval and anticipation of Fed rate cuts, making this halving different from previous ones.

Four years ago, the industry’s infrastructure was less mature, and there were fewer well-established alternative cryptocurrencies competing with Bitcoin.

The overall crypto market has been in a bull run, with factors such as the US stock market trend, Fed rate cuts, BTC spot ETFs approval, and the Ethereum Dencun upgrade contributing to price hikes.

With increasing mainstream understanding, acceptance, and adoption of crypto, I’m bullish about further market growth.

With spot Bitcoin ETFs, the current market comprises an increased proportion of institutional participants who generally have a lower risk appetite than retail. I believe that institutional investors’ strategies will be the determining factor of the post-halving Bitcoin market, as they do similarly to other asset classes.

One of the key indicators that we’ll look out for is the Assets Under Management (AUM) of the ETF. And as more diverse Bitcoin instruments are introduced, open interest in BTC futures or options will become a key factor in BTC prices. Bitcoin doesn’t live in a vacuum, and its price is influenced by a range of real-life variables.

On top of the macroeconomic factors discussed above, regulation and technological advancements are the other two prominent areas causing crypto price movements. Our approach at OKX in addressing these changes is to go back to our roots and focus on innovations that lead the industry while keeping our ears on the ground to localize and adapt to the latest trends wherever appropriate.

It’s hard to speculate, what we’ve previously seen is rapid price increases for a week or two pre halving and post-halving, then a period of market correction, before the bull run starts. The biggest change to the typical cycle is the introduction of BTC spot ETFs. ETFs have changed market patterns and are likely to change the upcoming halving patterns drastically.

The data points to an overheated market that is likely to correct; however, ETFs have room to grow, so whilst a correction is likely, ETF adoption should increase. Some indicators that help to analyze the market are meme coin volume, RSI heatmap, and high futures funding rates.

With the introduction of BTC spot ETF, the most successful ETF for the past 30 years, we are likely to see altered dynamics and a complete change in the typical 4-year cyclical pattern the crypto markets are accustomed to. Increased Institutional investment could create a unique pattern we haven’t seen before; we’ll have to wait and see.

It’s reasonable to expect a price increase, but again, coming back to the introduction of ETFs, the supply vs demand curve has been altered, some days have seen over 10k BTC purchased with only 800 BTC mined, the halving further alters this supply v demand curve so price action is inevitable.

It’s hard to speculate on the price, but we could see BTC touch 100k post-halving before re-tracing. You can’t account for variables. The market has been so turbulent over the past two years. What we have seen is market resilience, Binance’s recent issues with the SEC are a sign of this, despite the negative news, there was little to no material impact on the market.

Actually, halving is fundamentally what will support the BTC price during future corrections as the cost of mining is going to increase. In the case of a price drop at some point, miners might stop because of unprofitability while shrinking supply and supporting market price.

Despite the recent spike, volatility decreased during the last few years mostly because of saturation with capital from institutions. This saturation is seen in significantly elevated trading volumes and ATH of open interest at futures and options markets so that this process may continue. Still, I believe that the volatility will remain high in comparison to the fiat currencies due to the relatively poor market depth of the digital asset.

The main risk to watch at the moment is in the stock market, where a possible correction in TradFi can trigger institutional capital outflow from crypto due to the formal approach of investment companies based on credit ratings of assets.

BTC has the chance to reach 80k in March and 100k in 2024, continuing an upward trend until the halving, then possibly seeing limited price correction.

Further capital inflow in BTC ETFs is expected as many brokerage companies have not yet given clients access to these products, so more investors will have the opportunity to purchase ETFs through their broker.

However, a negative scenario for BTC price cannot be excluded in case of a crisis in the US economy, which might drive the price down to last year’s levels. The crypto market can grow in conditions of tranquility or growth of traditional finance.

Most institutional investors and whales, being long-term investors, do not pay much attention to volatility and temporary factors. According to this strategy, there is still a good time to form a long position without leverage for at least several years as BTC has huge potential for growth.

The Halving is often linked to mid-term price increases for Bitcoin. This shouldn’t be surprising; the laws of supply and demand aren’t unique to crypto, and at its core, that’s what the Halving is about – controlling the supply. I think the more interesting point about this Halving is that it comes at a crucial crossroads for crypto.

Demand from retail and institutional investors has increased steadily as confidence and safe access to digital assets have improved. This is especially true for institutional investors in the US who now have access to the market via Bitcoin Spot ETFs.

This change is a sign of the crypto industry maturing and a sign that the original promise of a more decentralized, transparent, and equitable financial system is just as appealing as it was in 2009.

This demand has led to more banks and financial institutions exploring ways to offer access to digital assets to their customers, which, in turn, has made investing in digital assets more accessible to more people. As more and more people embrace crypto’s value, more investors will enter the market.

Wider interest will help drive greater regulation, greater integration, an improvement in the quality of the industry and the actors within it, and a deeper acceptance of the intrinsic value that cryptocurrencies like Bitcoin offer to the wider financial system. The laws of supply and demand can’t be ignored.

Greater demand and reduced supply are going to affect the price of Bitcoin. And where Bitcoin leads, altcoins will follow.

Reviewing historical data from past Bitcoin halvings reveals a pattern of significant bull runs following each event. However, this cycle might present more nuanced price movements, driven by the entry of institutional investors into the Bitcoin market and changing regulatory environments around the world. These factors could easily introduce new dynamics not seen in previous halving cycles.

Even with the recent uptick in the markets, the potential for more growth remains, fueled in part by the upcoming halving as well as the recent approval of Bitcoin ETFs. The latest surge in Bitcoin and other digital assets suggests increasing investor enthusiasm and trust.

Of course, even in this positive environment, concerns remain regarding digital asset regulation still taking shape in many parts of the world and other unpredictable market events, such as a recession or financial crisis, which always have the potential to raise uncertainty and disrupt capital markets.

Institutional investors such as pension funds and family offices are increasingly getting exposure to Bitcoin, and we can expect the asset’s demand and value to change significantly after the 2024 halving.

The moves of these investors can deeply affect market mood and liquidity. Plus, when these institutions get involved, they add a layer of trust and steadiness, drawing more investors from the mainstream. This wave of institutional money might be the push needed for steady growth past the halving, possibly even smoothing out Bitcoin’s notorious swings.

The burgeoning interest in Bitcoin institutional investors increases the baseline demand not only among the institutions themselves but also from other investors who gain trust from seeing them engage in the market. This heightened demand is likely to exacerbate the impact of the increased scarcity resulting from the halving, adding upward pressure.

The Bitcoin Halving mechanism is built into the Bitcoin code to enforce scarcity, similar to a digital form of gold mining, where extractable gold becomes increasingly difficult to obtain over time. Historically, this has driven price increases (e.g., $12 to $1000 after the 2012 halving).

Historical data show a pattern where halving reduces the supply of new Bitcoin, which typically drives price increases when demand remains stable or increases. However, there are significant differences in the magnitude of price movements and the timing of reaching peaks.

Several unique factors may influence the price trends of Bitcoin after the halving in 2024:

– Increased participation by institutional investors may bring more stability to Bitcoin prices.

– New regulations or policy changes in key markets.

– Advances in blockchain technology, improvements in scalability and security, or the introduction of new financial products and ecosystems based on Bitcoin.

– Global economic conditions, including inflation rates, currency depreciation, and interest rates, could influence investor behavior.

The current market is at a historic high in terms of prices and investor enthusiasm. BTC has surpassed its previous high, and exchange long/short ratios are above 1.1. BTC contract positions and funding rates have also remained high for an extended period.

However, we are facing a brand-new bull market, dominated by Wall Street funds, where experiences from previous bull markets may not be applicable.

Institutional investors entering the Bitcoin market may bring more capital, stability, and recognition, driving long-term growth in prices. Their influx of capital increases liquidity, reducing price volatility and attracting more investors, thus driving prices higher.

With the approval of Bitcoin spot ETFs and the emergence of Bitcoin ecosystem projects, prices are likely to follow a trajectory similar to previous halvings after the 2024 halving. However, there is a risk of pullback due to macroeconomic uncertainty.

I am optimistic about Bitcoin’s price after the 2024 halving, expecting it to surpass the $100,000 mark. Factors supporting this outlook include positive regulatory developments, increasing blockchain adoption, new protocols, and the potential end of rate hikes. The halving itself incentivizes miners to push prices higher due to reduced mining rewards, suggesting a promising future for Bitcoin’s price.

Based on historical precedents, there could be a scenario where the Bitcoin price might increase 3 to 5-fold within a year. However, historical performance is not necessarily indicative of future performance. With new investors entering the sector and serious institutions potentially influencing price dynamics, outcomes may differ.

Recent market behavior suggests a ‘buy the rumor, sell the news’ pattern surrounding the halving event. Short-term investors who have established positions since Q4 of last year might be inclined to take profits. We could anticipate profit-taking to escalate with each potential new all-time high.

However, it’s challenging to predict whether investments in Bitcoin ETFs will be sustained and whether they can be considered ‘sticky money.’

The derivative markets could help us assess the level of speculation in the market. Looking at Bitcoin’s future open interest, it stands above $30 billion, having reached an all-time high of $35.5 billion a week ago, according to Coinglass.

A high Open Interest contributes to the magnitude of market corrections. It also indicates the level of leverage/risk in the market. Meanwhile, a surge in the put/call ratio for options suggests a growing fear of a price reversal. This intense market rally was fueled by US Bitcoin ETF investments, which amassed assets under management (AUM) exceeding $50 billion.

Both ETF investors and whales could become significant suppliers if they perceive the Bitcoin price as overvalued, potentially transforming a panic buying scenario into a panic sale. A lower interest rate environment could boost Bitcoin investment as it tends to thrive amidst heightened FIAT liquidity in the economy.

The recent correction in the Bitcoin market, marked by a decline of 17%, can be attributed to various factors. Despite Federal Reserve Chairman Jerome Powell maintaining the outlook of three rate cuts by year-end, the market’s bullish momentum has yet to reignite fully.

Looking back at previous halvings, they have generally marked the start of the next bitcoin bull market. The bull markets and parabolic rallies to all-time highs have usually come within 12-18 months post-halving. This time round, it is the first time where we are already seeing a parabolic rise in the bitcoin price action and new all-time highs being formed before the block reward halving has occurred.

The main reason is the bitcoin spot ETFs, more specifically, how these ETFs are continuing to acquire bitcoin in significant quantities each day, in the region of 5-15 times the daily new issuance of bitcoin that comes into circulation from the mining block rewards.

Demand for bitcoin is fast outstripping the new supply, and this is something we’ve never really had in previous cycles. As well as the upcoming halving causing a drop in new issuance of bitcoin, the current circulating supply is being squeezed too, with investors continuing to hold their bitcoin rather than sell. At the time of the halving four years ago in May 2020, around 60% of the circulating supply hadn’t moved within one year. Today that figure is much higher, at approximately 70%.

On-chain metrics point to miners’ reserves falling since August last year, this suggests to me that miners have already been selling into the current rally in preparation for the upcoming block reward halving. Any selling, drawdown or pullback is well bid because of the high demand from the spot ETFs. A slowdown in spot ETF inflows could be an indication of the market topping out and running out of steam.

The macroeconomic climate is also changing. Arguably, besides the last block reward halving, another reason spurring the rally to the former $69,000 all-time high in 2021 was the loose monetary policy, quantitative easing and fiscal stimulus that central banks and governments globally had to implement in response to the Covid-19 pandemic.

With the rise in inflation to levels not seen in decades which followed, central banks have been tightening financial conditions over the last couple of years. Since the inflation coming down to target levels, we could see financial conditions start to loosen again and the increase in liquidity find its way into the crypto space given the new rails in place from the bitcoin ETFs.

All in all I am bullish on bitcoin leading up to and after the halving. As far as price predictions go and where the bull market will peak is anyone’s guess, but I do think there is a fair chance we’ll see a six-figure bitcoin within this year or next. It’s an exciting time to be an investor or holder of bitcoin.

Historically, previous halving events have been associated with significant price increases, as the reduction in new supply coincided with sustained or growing demand. However, regarding the impact of Bitcoin halving on prices, this time is different from previous occurrences.

The problem that arose was that once halving occurred, prices tended to fall due to the fulfillment of upward expectations, followed by a period of fatigue as the market lacked better hotspots. The primary influencing factor in the current Bitcoin market is not just halving.

There has been a significant decrease in market enthusiasm regarding halving compared to previous occasions. Other more critical factors are at play, such as ETF approval through SFC, participation of mainstream institutional investors, and Bitcoin becoming a more widespread option for asset allocation.

Therefore, we anticipate that the market situation before and after this halving event will not create the same impact as before.

This time, the halving will only reduce the new issuance rate of the total supply by 0.9%, decreasing from 1.8% to 0.9%. institutional investors could inject significant capital and credibility into the market. They often invest with a long-term outlook, displaying more patience during market downturns.

Increased demand from institutional investors could help normalize or stabilize the market. Regulatory changes wield considerable influence, as shifts in government policies regarding cryptocurrencies can impact investor sentiment, adoption rates, and overall market stability.

Greater availability of spot Bitcoin ETFs and the anticipation of new regions introducing their own-for Bitcoin and other cryptocurrencies like Ethereum.

Bitcoin price usually rises after halving events because mining costs go up. However, the recent introduction of Bitcoin ETFs is a game-changer. These ETFs provide a direct way for US institutions to invest in Bitcoin, unlike before.

While some of this money might flow into other cryptocurrencies, Bitcoin ETFs still make it easier and more efficient for institutions to invest in Bitcoin, potentially boosting its price in the long run.

In my personal opinion, within the cryptocurrency industry, market sentiment indeed runs high, which can be observed through the fear index. However, if we examine Bitcoin’s (BTC) Google search index, the current data does not register as high compared to the bull market peaks in 2021 and 2017.

These two indicators are highly effective in gauging the sentiment of the general user base. The perspective of professional institutions, on the other hand, can be discerned by observing their trading behavior in the options market.

According to research conducted by BloFin Academy, the demand among institutional investors for allocating Bitcoin (BTC) in their investment portfolios is expected to inject an incremental $70 to $100 billion into the BTC market in 2024. This influx of capital is anticipated to further elevate the price of BTC.

As for BTC, I currently see no significant risks that could break this trend. I think the price of BTC will break $80,000 by the middle of this year and $100,000 within a year. On the one hand, the Fed will cut interest rates 2-3 times in the next 12 months, and the liquidity brought will provide more solid support for the price of BTC through the entrance to the US stock and crypto markets.

At the same time, due to the complete supervision of crypto-related products, more ETPs of BTC and ETH will be listed, thus attracting more funds to BTC. In addition, the demand for BTC as a macro asset allocation and the demand for broader application scenarios of cryptocurrency (such as RWA, etc.) will drive the price of BTC to rise further.

The current market leverage multiplier (only considering stablecoins and total market cap) is around 18x. In a full bull market, this leverage factor will exceed 20x, pushing the BTC price to exceed $100,000.

The upcoming Bitcoin halving event is a significant milestone in the world of cryptocurrency, it happens once in 4 years an, as history shows, has a major influence on the market. Basic economic principles suggest that when supply decreases while demand remains constant or increases, an asset’s price tends to rise at least for a short-term period.

Previous halvings have led to substantial price surges. For instance, after the last halving in May 2020, Bitcoin’s price surged from under $9,000 to about $60,000 in less than a year. While past performance doesn’t guarantee future results, this historical trend is worth noting.

In this cycle, BTC has already beaten its own ATH from the previous cycle before halving due to the huge demand among institutional investors after spot ETF approval.

Positive sentiment can drive overall market confidence. Media coverage and discussions around halving tend to attract attention from both retail and institutional investors. This heightened awareness can influence market dynamics. If Bitcoin’s price climbs rapidly following the halving, investors may shift their focus from Bitcoin to altcoins, which have not yet grown.

Also, some BTC investors might sell their BTC to profit and allocate part of the profit to altcoins, which might lead to a period of aggressive altcoin growth while BTC maintains a stable price and loses its dominance. This effect is called “alt season”.