The Bitcoin halving, an event that reduces the reward for mining new blocks by half, is a mechanism intended to control the Bitcoin supply and historically has been associated with price increases. However, Citi Research points out that, unlike Ethereum, Bitcoin has not shown consistent performance post-halving events. With the reward dropping from 6.25 BTC to 3.125 BTC per block this year, the market may not see those big price jumps like we used to.
According to Citi Research, one of the primary drivers of Bitcoin’s price has been the inflow into spot Bitcoin ETFs. The report notes that as of April 12th, there have been $12.6 billion in net inflows into these novel vehicles, which play a role in weekly price rises. Despite these inflows, the broader cryptocurrency market shows signs of decreased engagement, as reflected in trading volumes and open interest metrics.
The research also highlights a contrasting scenario in network activity between Bitcoin and Ethereum. The latter’s network activity has seen an uptick, which is not mirrored by Bitcoin, where activity remains relatively subdued.
In terms of economic influence, the report indicates that macroeconomic factors that previously aligned with cryptocurrency movements are now showing less correlation. This decoupling suggests that investors might need to adjust their strategies when considering cryptocurrency investments.
Furthermore, public interest as measured by search trends has not peaked, indicating muted anticipation for the upcoming halving compared to previous events. This lack of heightened public interest could translate into less dramatic market movements post-halving.
Citi Research concludes that while the Bitcoin halving remains a major event, its impact on Bitcoin’s price and market dynamics may be less pronounced this year.
Source: Cryptocurrency - investing.com
