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Bitcoin Halving Partially Priced In With No Big Rally Expected Afterward: Deutsche Bank

Apr 17, 2024
  • The bitcoin halving is already partially priced in, the report said.
  • Deutsche Bank said it does not expect a large rally after the event.
  • The geography of crypto miners is expected to shift following the halving to countries with lower energy costs, the bank said.

In simple terms, Deutsche Bank believes that the upcoming bitcoin reward reduction, which is predicted to happen soon, has already been factored into the market price. As a result, a significant surge in bitcoin’s value post-halving is not expected.

Every four years, the reward for mining new bitcoins gets cut in half, which decreases the production rate. This event, known as the “halving,” is projected to take place around late April (around the 19-20th).

Bitcoin has risen by over 44% so far this year, according to CoinDesk’s data, which is greater than the 20% increase of the CoinDesk 20 Index, a benchmark for the entire crypto market. The superior performance of Bitcoin can be attributed primarily to the debut of bitcoin spot ETFs in the United States during January.

The favorable post-halving development of Bitcoin Cash (BCH) could be a good sign for the primary Bitcoin network, according to the report. Bitcoin Cash is a variant that emerged from the main Bitcoin network in August 2017 through a process called a hard fork, which involves making significant modifications to the original blockchain’s code.
Moving forward, analysts Marion Laboure and Cassidy Ainsworth-Grace anticipate that prices will remain elevated based on the predicted approvals of future ETH (ether) ETFs, potential central bank rate decreases, and regulatory adjustments.

Furthermore, the authors noted an increase in layer 2 solutions and Decentralized Finance (DeFi) projects on the network, enhancing its real-world use and creating a promising outlook for Bitcoin and the entire cryptocurrency market.

Deutsche Bank predicts that the location for cryptocurrency mining may change after the halving event, since reduced block rewards will lead to fewer profits for miners, causing them to look for energy sources with lower costs.

Crypto miners have been drawn to Latin America, Asia, Africa, and the Middle East because of their more affordable energy prices in these regions, according to the report.

The banking sector has observed that past Bitcoin halvings have significantly boosted the use of cryptocurrencies, particularly among retail consumers, based on the rising number of active Bitcoin wallets.

From the first 150 days following each past Bitcoin halving, the count of retail wallets increased by:

Read more: Bitcoin Likely to Drop After the Halving, JPMorgan Says

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2024-04-18 18:56