• The upcoming bitcoin halving event could have a positive impact on the cryptocurrency’s performance, but this is not a guarantee.
• It is difficult to get a clear picture of how markets reacted to previous halving events as they were contaminated by other factors such as global liquidity.
• Retail demand for Bitcoin is likely to remain strong ahead of the event according to Wall Street giant JPMorgan.
What Is the Bitcoin Halving?
The Bitcoin halving event occurs when the number of rewards miners receive for verifying transactions on the blockchain is cut in half. This enhances Bitcoin’s prospective scarcity and supports its supply/demand dynamics.
How Markets Reacted To Previous Halvings
With only three recorded halving events in the past, evidence of how markets react is limited. It is difficult to see a clear pattern, particularly as the events were “contaminated by factors like global liquidity measures”, according to Coinbase (COIN).
Impact Of Global Liquidity
Coinbase says global liquidity appears to have peaked in the near term and there’s still another 9-10 months till the next halving which makes it unclear what effect it will have on bitcoin’s price behavior.
Retail Demand For Bitcoin
Wall Street giant JPMorgan (JPM) predicts that retail demand for Bitcoin will remain strong ahead of the event.
The upcoming bitcoin halving could potentially have a positive impact on its performance but there are no guarantees due to lack of information about how past markets reacted and uncertainty about global liquidity levels in relation to it. Retail demand for Bitcoin looks set to remain strong leading up to it however.