Bitcoin Halving to Boost BTC Price?

With less than three weeks left until the Bitcoin halving date, speculation continues as to what will happen to the Bitcoin price once the block reward for miners is halved. While some companies have been bullish on potential price hikes, cryptocurrency exchange Coinbase is warning investors to be cautious.

Ahead of the halving, on March 14, Bitcoin jumped to a new all-time high of $73,737.

Bullish investors such as SkyBridge Capital founder and managing partner Anthony Scaramucci are predicting that Bitcoin's price could rise to $200,000 within 18 months of the Halving. Other crypto industry analysts predict the price at $150,000.

The Bitcoin halving is a periodic event built into the protocol that reduces the reward for mining coins by half every 210,000 blocks, or approximately every four years. This happens in order to slow down the rate of generation of new Bitcoins, limit inflation and extend its emission over time.

The next Halving will take place around April 20, 2024, and the recent price surges in Bitcoin are believed to be partly related to this milestone. But Coinbase urges investors to remain calm about possible future market fluctuations.

"If you look at these cycles, it took some time for the market, especially the research market, to process what was going to happen," O'Loghlen says.

“So I would just encourage people to take a step back, think a little bit and try to understand if there are any proxies or other indicators that they can look at to help maintain their confidence.”

As part of technical analysis, some speculators use past halving events as part of their forecasting database.

Analyzing Bitcoin price changes due to halving is quite difficult, having only three past events. Past halvings have shown varying price changes, which indicates the importance of context, Coinbase explained, adding that more cycles of such events need to be analyzed for clearer patterns.

Influence of institutional interest

Another feature of the Bitcoin halving in 2024 that distinguishes it from previous events is the inclusion of Bitcoin exchange-traded funds in this process.

"I don't think we can attribute new demand for Bitcoin to the advent of spot exchange-traded funds," O'Loghlen said.

“I believe this is the new reality and now we need to see where it leads.”

In January, the US Securities and Exchange Commission approved 11 Bitcoin ETFs.

Since then, billions of dollars have flowed into spot ETFs from companies including BlackRock, Bitwise, Hashdex, VanEck and Fidelity.

While the SEC has been described as being aggressive on cryptocurrencies and being a regulatory enforcer, O'Loghlen noted that regulators at the Australian Securities and Investments Commission have taken a "conservative stance."

The cryptocurrency industry, according to O'Loghlen, needs to do more to educate policymakers about technology and digital assets.

"It's important for us as an industry to try to contribute as much as possible to the regulation of cryptocurrencies because there are very important things happening in Canberra, as well as in Washington," he said.

"Cryptocurrency is not always a priority topic for senators, congressmen or their representatives. But lately we have had very good momentum in this direction."

How will Coinbase handle the halving?

Cryptocurrency exchanges often experience outages during Bitcoin surges, leading to massive spikes in user traffic, trading activity, and significant fluctuations in Bitcoin's price. For some traders, Coinbase's fall during a time of high volatility was a sign of an imminent bull run.

According to O'Loghlen, Coinbase is fully prepared for the halving.

Last month, during a time of increased traffic, Coinbase crashed again, reporting degraded performance on the exchange's website.

Most Coinbase customers reported zero balances in their wallets.

“Occasionally, zero balances in Coinbase accounts and delays may be experienced by a certain portion of users,” Coinbase said on the company page, adding that this did not affect trading operations.

Since the start of the latest bull market, O'Loghlen said Coinbase has seen record user influx and adoption of the platform, adding that the company was prepared for this but acknowledges some challenges.

Future prospects

Noting the continued daily net flows into US spot Bitcoin ETFs, Coinbase notes that this halving cycle could be different if Bitcoin receives a strong tailwind, contributing to tighter market dynamics as the supply of newly mined Bitcoin dwindles. Meanwhile, Bitcoin ETFs symbolize the official acceptance of cryptocurrencies as a new asset class by major financial institutions.

In its report, Coinbase notes that the current price path is just the beginning of a longer bull period, and further price increases will be needed to balance supply and demand.

“Coinbase has been in the midst of a crypto winter, making it the best environment to stress test your business and prepare for the next bull run,” he said.

“I am confident that this event is just another anchor and another starting point in the development of the industry. Bitcoin’s halving has happened before, and it will happen again, far beyond our lifetime,” O’Loghlen emphasized. “This is another event, an important event, but it will not affect the course of the industry,” he said, citing the collapse of FTX as an example.

“This is just another important structural episode on the crypto path,” he concluded.