Crypto Market Miscalculates Long-Term Effect of Bitcoin Halving: Bitwise Report

Bitwise Asset Management has illuminated the often underestimated long-term impact of Bitcoin halving events in the crypto market.

As the highly anticipated halving on April 20 approaches, Bitwise suggests that historical data reveals a compelling pattern. It shows that while short-term price action following halvings may be disappointing, the subsequent year often witnesses extraordinary gains for Bitcoin.

Bitwise Confirms Bitcoin Halving Predictions

Based on past halving events, Bitwise clarified the subsequent price pattern with an example. He noted that after the 2012 halving, Bitcoin immediately recorded a modest 9% increase, followed by an astounding 8,839% surge in the subsequent year.

Historically, the Halving Has Been Good for Bitcoin's Price Long-Term (a Look at the Data)

The change in bitcoin's price in the year following the halving:

2012: 8,839%
2016: 285%
2020: 548%

The change in bitcoin's price in the month following the halving:

2012: 9%
2016: -10%... pic.twitter.com/aaXSakLfko

- Bitwise (@BitwiseInvest) April 16, 2024

Similar patterns emerged after the 2016 and 2020 halvings, with Bitcoin recording significant post-halving gains. Bitcoin price surged 285% the following year after the 2016 halving and witnessed a 548% gain in 2021 after the 2020 halving. Despite such historical data, Bitwise emphasized that the market tends to underestimate those long-term gains and focus more on the short-term impact.

Notably, the current market cycle supports this sentiment. Bitcoin hit an all-time high of $73,679 before the first-ever halving event. However, it has pulled back to a low of $61,500, an approximately 16% decline.

Industry experts have turned pessimistic amid this price correction, with some predicting short-term challenges. Markus Thielen of 10x Research predicted a potential $5-billion miner sell-off after the Bitcoin halving, which could trigger a downtrend.

Also, Marathon CEO Fred Thiel believes that the expected halving rally has already been factored into prices. This means potential post-halving movements have already taken place.

In light of recent market corrections, analysts caution investors about further potential downturns. For example, Rekt Capital highlights significant pullbacks between 18% and 23% since the 2022 bear market bottom.

#BTC

Here is a list of all Bitcoin pullbacks dating to the Bear Market Bottom of 2022:

-23% (February 2023)

-21% (April/May 2023)

-22% (July/September 2023)

-21% (January 2023)

-18% (March 2023)

Almost -16% currently (April 2023)

Bitcoin needs to hold... pic.twitter.com/IgcpD27Arm

- Rekt Capital (@rektcapital) April 16, 2024

According to Rekt Capital, the market has already witnessed a 16% correction, and more might be underway. Moreover, Cold Blooded Shiller suggests that Bitcoin could potentially experience a 30% correction, with prices potentially falling to around $51,000.

Bitcoin Market Outlook as Halving Approaches

With barely three days to the Bitcoin halving and geopolitical tensions intensifying amid US economic uncertainty, the crypto market bleeds. Bitcoin now trades around $60,100, approximately 22% down from its recent all-time high of $73,750.

The global crypto market is down over 1.4%, with trading volume declining by over 18% in the last 24 hours.This downturn extended across major cryptocurrencies, with Ethereum, Solana, and Cardano recording significant drops in value.

Given the current outlook, analysts have predicted a bearish trajectory for Bitcoin. Research firm 10x Research, known for predicting Bitcoin's 2022 low and anticipating a surge before the halving, foresees a negative turn. Their recent report, We sold everything last night," signals a bearish outlook.

The ongoing downtrend is partially attributed to events over the weekend, including the escalating tensions between Iran and Israel. Several uncertainties about the direction of prices persisted into Tuesday, April 16, amid concerns about Israel's response to Iran's actions.

Also, the market witnessed significant profit-taking as investors capitalized on the pre-halving rally to cash out.

BTC ETFs saw a net outflow of $58 million on April 16, marking three consecutive days of withdrawals amid a declining BTC price trend. This suggests declining investor interest, possibly driven by fear of a market downturn.

Both Grayscale's GBTC and BlackRock's IBIT witnessed daily flows below $100 million. On the other hand, ARK 21Shares Bitcoin ETF (ARKB) resumed activity with an outflow of $12.9 million after three days of inactivity.

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