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The highly anticipated Bitcoin halving event is very close. This event, which will significantly reduce the supply of new coins entering the market, coincides with a period when the demand for BTC is rapidly increasing.
But executives from hedge funds, cryptocurrency exchanges, payment platforms and blockchain analysis firms warn that investors should not expect Bitcoin to reach an all-time high immediately after the halving.
“The price reaction typically does not occur immediately. Major post-halving growth occurs six to 18 months later, and larger price movements become statistically less likely as market size increases,” said Rikke Staer, CEO of payment solutions platform Coinify.
Brian Dixon, CEO of hedge fund Off the Chain Capital, echoes this sentiment, suggesting the price will begin to rise in 12 to 18 months.
The halving event coincides with a significant increase in institutional participation in the cryptocurrency market. The launch of new spot Bitcoin ETFs has brought a new generation of retail investors into the asset. Alex Cable, Vice President of the WEMEA region of Blockchain analysis firm Chainalysis, points out that the percentage of Bitcoin held by institutional investors increases after each halving event. “Institutions have not only entered the market, they are now shaping the course of the market,” Cable said.
While there is a consensus that Bitcoin’s price will eventually rise, market observers believe in a short-term price decline. This is because current market conditions are different from previous halving events. According to some analysts, investors may sell their Bitcoin holdings when the halving occurs, a phenomenon known as a “sell the news” event. This could be especially the case if market sentiment is negatively affected by external factors, such as escalating tensions in the Middle East, according to Jag Kooner, Bitfinex’s head of derivatives.
*This is not investment advice.
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