Bitcoin’s upcoming halving might not have as much of an impact on the price of bitcoin as seen in previous cycles, experts predict.
This is because the spot bitcoin exchange-traded funds (ETFs) have already pushed bitcoin to new highs as pressure on supply strengthened.
Nevertheless, the long-term effects on both the price of bitcoin and subsequently flows into the ETFs will be positive.
Bitcoin’s {{BTC}} halving – which is often seen as a bullish catalyst for the price – may not be as positive as the market thinks, thanks to the approval of spot exchange-traded funds (ETF).
Halving, which occurs every four years, cuts bitcoin’s supply growth by half, historically causing upward pressure on the price of the largest digital asset. The previous halving cycles pushed bitcoin to new highs, and this time, strong demand from the spot ETF may add even more fuel to the rally.
“If we look at demand generally since the ETFs have launched, it has created tremendous supply shock already,” said Brian Dixon, CEO of investment firm Off the Chain Capital. “Once the halving occurs, and that supply is further reduced, it’s only logical to think that the price will appreciate.”
Read more: Bitcoin Halving, Explained
On the surface, that may be the case as the demand from the funds has been significantly more than the 900 new BTC that are mined daily. And when that supply gets cut in half, it might create an even bigger pull on the prices.
However, it might not play out the same way this time.
The price of bitcoin had rallied 46% since Jan. 11, when the spot ETFs started trading in the U.S. The demand from these funds has been so strong that the price of the digital asset rallied to a new all-time high to keep up with the onslaught of bitcoin purchases. But the market may have gotten a bit ahead of itself in the hype.
“This is the first time in which bitcoin broke its all-time highs before the halving, so there is a little bit of a concern that the ETFs have pulled demand forward and that maybe we’re going to linger where we are for a little bit,” said David Lawant, Head of Research at FalconX.
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