$67,950.04
-2.17%
$3,824.62
+1.53%
$86.23
-0.27%
$30.54
-1.09%
$139.21
+0.19%
$0.00
+0.02%
$33.01
+7.62%
$0.16
-4.26%
$26.30
+5.84%
$0.00
-2.08%

Bitcoin halving could be 'buy the rumor, sell the news' event, crypto payments


The bitcoin halving could be a “buy the rumor, sell the news” event, according to the CEO of a crypto payments solution provider.

“With more sophisticated market participants and institutional investors in this market cycle, we may see a case of ‘buy the rumor, sell the news’ for this halving,” Coinify CEO Rikke Staer said in an email sent to The Block.

Staer added that because the halving cuts miner rewards in half, less efficient mining operations might become unprofitable. “These miners might be forced to sell existing bitcoin holdings to cover electricity costs, equipment maintenance, and other operational expenses,” he added.

According to the Coinify CEO, the sudden influx of bitcoin from miners selling to stay afloat could overwhelm existing buy orders and drive down the price. “This can create a negative feedback loop, where lower prices force more miners to sell, further depressing the price,” he said.

Bitcoin halving price reaction will not be immediate

Staer added that bitcoin’s price reaction to the upcoming halving could take several months, and replicating the dramatic percentage gains observed in the past may be challenging.

“Price reaction is typically not immediate, historically speaking, major post halving growth occurs 6-18 months and larger price movements become statistically less likely with increasing market size,” he said.

Staer added that the dramatic percentage gains observed in prior halvings might be difficult to replicate simply due to the current bitcoin market’s sheer size.

Bitcoin joins equities in market rebound

Bitcoin has rebounded alongside risk assets after the macroeconomic landscape was hit by uncertainty on Tuesday after U.S. Federal Reserve Chair Jerome Powell voiced his support for continuing the central bank’s restrictive monetary policies.

The bitcoin price posted a muted 0.7% increase in the past 24 hours and was changing hands for $62,829 at 9:48 a.m. ET., according to The Block’s Price Pages

The bitcoin price has gained in the past 24 hours. Image: The Block.

On Tuesday, Fed Chair Powell told a forum in Washington that recent data has not boosted the central bank’s confidence that it is nearing its 2% inflation goal. The CME’s FedWatch tool forecasts a 98.4% likelihood that rates will remain steady in May. It has also trimmed its prediction for a rate cut at June’s Federal Open Market Committee (FOMC) meeting to 16.4%, while 83% of interest rate traders are betting that rates will remain unchanged.

Stocks showed robustness in the face of the new reality that cuts might come later than expected. In the U.S., the Dow Jones was up 0.6% soon after the opening bell, while the S&P 500 gained 0.4% and the Nasdaq Composite rose 0.4%. In London, the FTSE opened Wednesday 38 points higher at 7,859.

 

In Europe, the regional Stoxx 600 index traded up. However, Veyret ActivTrades Technical Analyst Pierre Veyret said that risk appetite among traders still remains on the back foot after Fed Chairman Jerome Powell’s recent hawkish comments and that investors are now looking for reasons to buy or hold their exposure to stocks through corporate results.

 

“Traders have faced an uneven set of results so far. Disappointing earnings from the tech sector, with ASML in focus, were offset by reassuring reports from LVMH and Adidas yesterday,” Veyret said in an email sent to 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.



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