Bitcoin Halving and BTC Price: Will This Time Be Different?

The Bitcoin halving is fast approaching—and market analysts tell Decrypt that there are unique circumstances this time around that will play important roles for traders and investors.

The lingering doubt for most is the age-old question: Is the Bitcoin halving priced-in?

The biggest digital coin by market cap has shot up in value following the past three halving events—but it wasn't immediate. And this time, there are other factors at play—including renewed interest from retail investors following the launch of Bitcoin ETFs in the US market, as well as looming interest rate cuts from the Fed, which could be bullish for risk assets across the board.

For those who don't know, the Bitcoin halving will mean that miners, the individuals and groups who process transactions on the blockchain and mint new coins, receiving rewards in the process, will have their payments cut in half.

The idea is that Bitcoin's inflation is kept in check by limiting the amount of new digital coins entering the market. The event is baked into Bitcoin's code and occurs roughly every four years—and will continue until the total supply of 21 million Bitcoin is mined.

Dessislava Aubert, senior analyst at analytics firm Kaiko, told Decrypt that leverage is increasing and BTC open interest crossed the $11 billion mark for the first time since 2021 last week. This means traders are placing larger bets on Bitcoin by borrowing capital via the derivatives market ahead of the long-awaited event, expecting the price of the cryptocurrency to go up in the short to medium-term future.

But there are no guarantees.

“Halvings do not guarantee an increase in price,” she said, noting that other cryptocurrencies—like Litecoin– also undergo halvings but do not experience a price increase after the event.

She added, though, that this time, there was more hype surrounding the event—and that the crypto sphere had matured.

“There are some important differences relative to previous events which can affect BTC's price performance: the market has matured (volatility has declined), miners have been preparing pro-actively for the event, building liquidity via fundraising and selling,” she said.

Since the Securities and Exchange Commission last month approved 10 spot Bitcoin exchange-traded funds (ETFs), the price of the biggest cryptocurrency has gone up as demand for the asset increases.

Major fund managers like BlackRock have snapped up billions of dollars in Bitcoin as their clients buy ETF shares that track the underlying price of the asset.

This, argued Aubert, is helping Bitcoin in the long-term—regardless of the halving. “Also the sector has already consolidated significantly during the bear market, and most importantly we have steady ongoing demand from ETFs,” she said.

Market analyst Craig Erlam told Decrypt that price moves in the coming months should not be directly attributed to the halving, adding that Bitcoin's price moving higher is “something that should happen over a very long period of time.”

Mikkel Morch, founder of the digital asset investment fund ARK36, added that a mature market, particularly the approval of ETFs, could be what helps Bitcoin soar to new all-time highs with this halving.

“The upcoming halving is more than a historical repeat,” he said. “This time round, it will be a moment of truth for Bitcoin's institutional adoption, market maturity, and resilience against a complex macroeconomic canvas.”