This halving will be different from previous ones: Here’s why

The Bitcoin block reward halving, which occurs every four years, is now only 8 days away. Current data shows that the halving will occur on April 20. Bitcoin’s fourth halving is different in many ways. The halvings in 2012, 2016 and 2020 did not have such different dynamics. What makes the fourth halving unique?

First of all, Bitcoin price broke a record before a halving for the first time in its history. This has never happened in the past. While the price record usually comes months after the halving, this time it was seen 1.5 months before. Antoni Trenchev, co-founder of the cryptocurrency exchange Nexo, said in his assessment of the issue: “What makes this halving unique is that Bitcoin has already exceeded the highest level of the last cycle. “This has never happened before, making it much more difficult to predict the length and severity of the cycle.” says.

Another reason why the upcoming halving will not be like the previous ones is that professional investors have entered the market. From BlackRock to Fidelity, from JPMorgan to Goldman Sachs, Wall Street’s major institutions, family offices, asset management companies and pension funds have begun to include Bitcoin in their portfolios and services. Some of these institutions are also marketing the upcoming halving these days.

The existence of ETFs also makes this halving definitely different from others. Bitcoin ETFs, which were launched on January 11, have seen a net inflow of $12.6 billion since then. This figure, equivalent to 180 thousand BTC, is more than twice the amount of BTC produced in the same period. It should also be noted that major brokerage firms have not yet completed their review processes for ETFs and have not started offering these products to their customers. ETFs may ensure that the impact of the halving is greater than in the past. Last week, Asher Genoot, CEO of mining company Hut8, said that major banks contacted them directly to buy Bitcoin due to supply shortage on exchanges. Considering that daily production will decrease by half after the halving, the picture becomes more striking.

According to Coinbase, the current price action is just the beginning of a longer bull run and further price increases will be required for supply-demand dynamics to reach equilibrium. Rather than waiting for this price increase to occur immediately after the halving, it may be a better strategy to focus on the long-term picture. Given the tendency of markets to overreact in the short term, the real opportunity for investors lies in longer-term trends beyond these fluctuations.