In anticipation of the fourth Bitcoin halving scheduled for mid-April, Coinbase Institutional has released a primer for investors.
The Bitcoin halving, occurring every four years or upon mining every 210,000 blocks, will see miner rewards halve from 6.25 to 3.125 bitcoin per block upon reaching the 840,000 block.
The document aims to guide institutional investors by examining the impact of previous halvings and incorporating the recent developments in the cryptocurrency market, such as the introduction of Bitcoin ETFs and Bitcoin’s ascent to unprecedented heights before the halving.
Historically, Bitcoin has experienced significant valuation increases in the months following past halvings. The first halving led to a dramatic surge in Bitcoin’s (BTC) value, climbing 139% in the six months leading up to the event and 923% in the following six months. Although the extent of growth in previous halvings has not matched this initial surge, the pattern of post-halving appreciation has been observed.
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Coinbase analysts highlight the unique conditions surrounding the upcoming halving, noting Bitcoin’s 157% increase since October and suggesting the potential for continued growth.
“While it’s possible that the halving could positively impact Bitcoin’s performance, there’s still only limited historical evidence about this relationship, making it somewhat speculative,” the company’s analysts explained.
The report also points to macroeconomic factors, such as potential Federal Reserve rate cuts, which could influence Bitcoin’s trajectory. Additionally, it considers the behavior of long-term holders, defined by Glassnode as investors holding for at least 155 days, who historically are less likely to sell in response to halvings.
The primer does not overlook potential challenges, including the likelihood of increased selling pressure from miners adjusting to lower rewards and companies navigating bankruptcy proceedings.
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