Crypto Markets Will Be Driven by Macro Factors Following the Halving, Coinbase Says

In their research report published on Thursday, Coinbase suggested that the future trend of digital asset markets, specifically after the bitcoin halving, is likely to be influenced significantly by broader economic conditions, despite the fact that crypto’s underlying fundamentals remain robust.

heightened geopolitical conflicts, prolonged high interest rates, inflation, and mounting national debts.

In simpler terms, Han pointed out that the close relationship between the prices of bitcoin and alternative cryptocurrencies (altcoins) recently observed suggests that bitcoin acts as a leading role or benchmark in the cryptocurrency market, even as it gains recognition as a significant asset for larger financial investments.

In the past, halvings have typically led to bull markets. However, the current situation may be different as “other catalystic events within the ecosystem” have also contributed to these price surges. (Or, Previous halvings have usually initiated a bull market; however, this time around, other significant developments within the ecosystem might be fueling the upward trend.)

Every four years, the reward for mining new bitcoins gets cut in half, reducing the increase in the total bitcoin amount by 50%. This event is anticipated to take place later tonight or early tomorrow, based on UTC time.

Coinbase explains that although cryptocurrencies like Bitcoin have often been considered high-risk investments, the currency’s stability and the emergence of approved spot Bitcoin ETFs have attracted two distinct groups of investors. The first group sees Bitcoin solely as a speculative asset for potential gains, while the second views it as a form of digital gold, providing protection against geopolitical uncertainties.

Bitcoins role as a macro hedge for some investors has contributed to the less severe pullbacks during this market cycle, according to the report.

Goldman Sachs, a major player on Wall Street, issued a warning in their recent report: “The past trends and effects of cutting interest rates in half may not accurately apply under the current economic circumstances. Exercise caution.”

Read more: Goldman Cautions Against Extrapolating Previous Bitcoin Halving Cycles for Price Predictions