Bitcoin halving was 'not priced in' despite recent correction, analyst says
Quick Take
- Significant bitcoin value expectations were not priced into the market prior to the halving event, despite the asset’s price dropping by over 7% in the past week, an analyst said.
The bitcoin halving that occurred this past Saturday has not yet resulted in the expected price increase stemming from the subsequent supply crunch. Instead, the world's largest digital asset by market cap has fallen by over 7% in the past seven days, according to The Block's Price Page.
However, one analyst suggests that the recent price correction is due to uncertainty in the macroeconomic environment rather than being the result of a sell-off now that the effects of the bitcoin halving have been priced in for several weeks.
"I think the correction we are witnessing is macro-driven and also visible in U.S. tech stocks. It is a combination of repricing higher in U.S. rates and the start of tech earnings disappointing investors' expectations," Nansen.ai Principle Research Analyst Aurelie Barthere told The Block.
U.S. inflation still rising
According to the U.S. Bureau of Economic Analysis, inflation rose to 2.7% on an annual basis in March from 2.5% in February, the U.S. Bureau of Economic Analysis reported. The hotter-than-expected inflation reading was released on Friday, exceeding the market expectation of 2.6%.
The core U.S. Personal Consumption Expenditures (PCE) Price Index, which excludes volatile food and energy prices, held steady at 2.8% on an annual basis, surpassing analysts' estimate of also 2.6%.
RELATED INDICES
Barthere pointed out that the 250-day period following the halving has historically been the strongest period for bitcoin returns, compared with the 115 days prior to each event, and for non-having years.
Historically, the period between the halving and 250 days after the event results in higher bitcoin returns. Image: Nansen.
Bitfinex analysts point to on-chain movements by long-term holders distributing supply in the lead-up to the halving, suggesting that some price expectations were already factored into market conditions. However, they believe that current muted market conditions are expected as the market enters into the seasonally slower summer period.
According to Wintermute OTC Trader Jake Ostrovskis, the halving's effect on the price should be viewed from a longer-term perspective. "The halving itself is anticipated to have a longer-term impact rather than be a short-term driver. Heavy call demand at $100,000 in December 2024, and $200,000, in March 2025, suggests this view remains in play," Ostrovskis told The Block.
Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.
© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
