With Bitcoin BTC +4.06% ’s latest halving estimated to occur around 9 p.m. ET today — when the miners’ block subsidy reward gets cut from 6.25 BTC to 3.125 BTC — we asked several firms in the industry what impact it could have on bitcoin’s price action.

Bitcoin halvings (or as some call them, "halvenings") have been associated with significant fluctuations in the cryptocurrency's price. While not a direct cause-and-effect relationship, these events have often preceded substantial bull runs in the bitcoin market. 

Bitcoin price post-halving. Image: Bernstein.

“Historically, bitcoin has experienced notable price increases in the six months following each halving event. In fact, bitcoin reached new all-time highs in each four-year period between the previous halving events,” Binance CEO Richard Teng told The Block.

“The main question everyone has is how will the bitcoin price react to the halvening this time around?” Kraken's Head of Strategy Thomas Perfumo said. “Perhaps the market cycle is kicking off earlier, but history suggests we haven’t reached the end of the cycle either.” 

Nansen research analyst Aurélie Barthere agreed that bitcoin’s post-halving price returns were generally superior — five to six times greater in the 250 days following halvings compared to other years. “Right now, the macro (high U.S. rates for longer) in the U.S. is forcing a correction in risk assets, including crypto, but our main scenario is that the uptrend remains intact for bitcoin," Barthere said.

"While others look at the Bitcoin price on a technical basis and predict it will increase, I, on the other hand, am looking at the basic fundamentals of supply and demand and drawing the same bullish conclusions," Greg Beard, CEO of Stronghold Digital Mining, added.

Is the halving ‘priced in’?

The question of whether the bitcoin halving is priced in gets thrown around endlessly each time the halving comes around. Unlike the previous halving cycles, however, bitcoin reached a new all-time high of $73,836 before today’s fourth halving on March 12 — which analysts at crypto exchange Coinbase argued earlier this month made a case for it being priced in this time around.

Investment bank JPMorgan agrees. "We do not expect bitcoin price increases post-halving as it has already been priced in," analysts led by Nikolaos Panigirtzoglou wrote in a report on Wednesday, reiterating their previous similar views. "In fact, we see a downside for the bitcoin price post-halving for several reasons."

Their reasons include bitcoin still being in "overbought conditions," according to an analysis of open interest in bitcoin futures. Additionally, the bitcoin price is still well above JPMorgan's volatility-adjusted price of $45,000 compared to gold and remains above its projected production cost post-halving of $42,000, the analysts reiterated.

However, others disagree. John Glover, a former Managing Director at Barclays Bank and current CIO at crypto lending platform Ledn, warned market participants to be patient, arguing that the reduction in new supply will take time to impact the market.

"While many participants are focused on the historical impact that halvings have had on the BTC price, few are talking about how long this typically takes to come to fruition. Each halving has resulted in peak prices (prior to a big correction) between 10 and 16 months from the actual event. The key here is patience, but as we know, people seldom let their profits run," Glover said.

“This halving will trigger an immense supply shock to the system. With current U.S. ETFs at 5-10x daily supply, post-halving demand would be 10-20x supply,” Samson Mow, CEO of bitcoin technology company JAN3, added.

“The Bitcoin halving is priced in for the 0.1% of the world population that understands it,” said Dan Held, General Partner at bitcoin-focused VC firm Asymmetric, told The Block. “The other 99.9% aren’t paying attention.”

Is this time different?

Beyond the price action, increased participation in the bitcoin market via the recently launched spot bitcoin exchange-traded funds in the U.S. is certainly a differentiating factor this time around.

“The fourth halving has also fallen at a time where there’s substantial increase in institutional engagement, since the last halving occurred in 2020,” Chainalysis WEMEA Area VP Alex Cable said.

In January, spot bitcoin ETFs from BlackRock, Fidelity and others began trading in the U.S., and spot bitcoin ETF applications from China Asset Management, Harvest Global, Bosera and HashKey were subsequently approved by Hong Kong’s Securities and Futures Commission earlier this week.

“Institutions have not just entered the market, they are now shaping its trajectory, bringing with them a new level of credibility, stability, and interest from mainstream finance. Bitcoin’s increasing integration into the global economy is paving brand new paths for its demand and utility,” Cable added.

The spot bitcoin ETFs have had an impressive start this year, generating more than $12 billion in combined net inflows over the space of just a few months. However, spot bitcoin ETF flows have slowed since peaking at a net daily inflow of $1.05 billion on March 12, according to The Block’s data dashboard. They are also currently enduring a net outflow streak of five consecutive trading days, totaling $319.1 million in the run-up to the halving.

"Spot bitcoin ETFs have reshaped bitcoin's market structure going into the halving by establishing a new anchor for BTC demand,” Scott Shapiro, Senior Product Director at Coinbase, told The Block. “Consistent daily net inflows into these products could provide a massive tailwind for the asset class as the rate of newly mined bitcoin falls. While this does not necessarily indicate that we’re about to embark on an imminent supply crunch, we believe that the increased access to a wider capital base coupled with new supply-side dynamics could make the few months after this halving different.”

Stronghold’s Beard agreed that the combination of reduced coin supply and increased demand would lead to a further imbalance. “The recent surge in price, backed by bitcoin ETFs, is likely to generate more interest, creating a compound effect. Given this, it wouldn't be surprising to see the price of bitcoin increase significantly over the next two years,” he said.

“This uptrend was potentially driven by enhanced interest from institutional investors within the U.S., which also contributed to a slight escalation in market volatility during the timeframe,” Hashdex CIO Samir Kerbage told The Block.

"We are monitoring bitcoin's price action and whether a consolidation will follow the 7-month streak of positive performance. The ongoing demand from ETFs may offset any potential consolidation,” Kerbage added. “Regardless of how the halving plays out, we believe the investment case for bitcoin remains as strong as ever as institutional interest accelerates amidst a favorable macro environment and positive onchain developments.”

Others argue that the halving is more about narrative than anything else this time around. “Daily supply will be halved, but as a percentage of average daily volume, it's an insignificant amount,” Gemini Head of Institutional Claire Ching said. The price of bitcoin will remain skewed on the demand side of the equation, with ETFs and the institutionalization of bitcoin being a big driver of that.”

"I do believe the significance of the bitcoin halving is being exaggerated. However, the latest bitcoin rallies are much more than a fad. Bitcoin is maturing with institutional adoption,” Stronghold’s Beard added.