Key Points
- The upcoming Bitcoin halving could trigger a ‘buy the rumor, sell the news’ event, suggests Coinify CEO.
- Bitcoin’s price reaction to the halving may not be immediate and could take several months.
Rikke Staer, CEO of Coinify, believes the impending Bitcoin halving could lead to a ‘buy the rumor, sell the news’ scenario.
Staer suggests that with the increasing presence of sophisticated market participants and institutional investors, this pattern may emerge during the halving.
Impact on Miners
He also highlights that the halving, which reduces miner rewards by half, could render less efficient mining operations unprofitable. These miners may be compelled to sell their existing Bitcoin holdings to cover operational costs such as electricity and equipment maintenance.
Staer warns that a sudden surge of Bitcoin from miners selling to stay afloat could exceed existing buy orders and decrease the price. This could potentially create a negative feedback loop where lower prices force more miners to sell, further reducing the price.
Halving’s Effect on Bitcoin Price
He further notes that the price reaction to the upcoming Bitcoin halving may not be immediate and could take several months. Replicating the dramatic percentage gains seen in previous halvings may prove challenging due to the current size of the Bitcoin market.
Bitcoin has shown resilience alongside other risk assets following recent macroeconomic uncertainty. Bitcoin’s price posted a modest 0.7% increase in the past 24 hours and was trading at $62,829.
The Federal Reserve Chair, Jerome Powell, recently expressed support for the continuation of the central bank’s restrictive monetary policies. This announcement did not significantly impact Bitcoin’s performance.
The CME’s FedWatch tool predicts a 98.4% chance that rates will remain steady in May. It also reduced its forecast for a rate cut at June’s Federal Open Market Committee (FOMC) meeting to 16.4%.
Despite the new reality that rate cuts might come later than expected, stocks demonstrated strength. The Dow Jones was up 0.6% shortly after the opening bell, while the S&P 500 gained 0.4% and the Nasdaq Composite rose 0.4%.
In Europe, the regional Stoxx 600 index traded up. However, Pierre Veyret, a Technical Analyst at ActivTrades, stated that risk appetite among traders remains cautious following Powell’s recent hawkish comments. Investors are now seeking reasons to buy or maintain their exposure to stocks through corporate results.
Traders have encountered a mixed set of results so far. Disappointing earnings from the tech sector were balanced by reassuring reports from LVMH and Adidas.