Helena Lyng Blak
6 weeks ago

Buy the Rumor, Sell the News: Expert on Bitcoin’s Upcoming Halving

Will the market see a long-term upward swing?
Block reward gets cut in half every four years for crypto miners.
24K-Production / Shutterstock.com

The fourth Bitcoin halving is rapidly approaching. The halving is expected to take place at block number 840,000. Currently, the block height is roughly 837,700.

Cryptocurrency analyst Mads Eberhardt at Steno Research foresees the next Bitcoin halving as a short-term "buy the rumor, sell the news"-event, thereby echoing the 2016 halving's pattern. This time around, however, there is an additional heightened anticipation from Bitcoin ETF holders.

“One does not need a Ph.D. in physics to understand that the forthcoming fourth Bitcoin halving will result in the smallest reduction in new issuance, in terms of bitcoins, in Bitcoin’s history so far,” says Eberhardt. 

Despite the reduction in the number of Bitcoins awarded as a block reward is the smallest yet, it has the highest value ever in US dollars, simply due to Bitcoin’s current price point being at an all-time high.

Eberhardt believes that the halving will propel the market upwards in the long-term but not necessarily in the short-term.

“The historical patterns following Bitcoin’s halvings illustrate that while the Bitcoin price is much higher a year after each of the three halvings, the immediate impact on the price is not as pronounced,” he explains.

“In other words, the supply shock induced by halvings does not translate into instant price appreciation. Instead, the price movements in the short term following a halving are generally more subdued. Taking the most recent halving as an example, Bitcoin experienced a 34.9% increase after the first 90 days, though for a significant portion of that period, the appreciation was under 10%.”

According to Eberhardt’s projections, Bitcoin is likely to dip in the first 90 days following the halving. He does, however, feel it is crucial to emphasize his optimistic long-term perspective:

“The halving is profoundly bullish for Bitcoin.”

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