Why Almost Everyone Was Wrong About the Bitcoin ‘Halving’

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Bitcoin was falling Thursday and other cryptocurrencies were mixed, with momentum still lacking following a surge in prices earlier this year.

Bitcoin

has fallen 0.7% over the last 24 hours to $62,106. The largest cryptocurrency, Bitcoin hit a record high near $74,000 in mid-March amid a surge of interest from new spot Bitcoin exchange-traded funds, or ETFs, but its price has since dropped.

On the face of it, the drop is puzzling, considering that the price should have been supported by the April 19 halving, when Bitcoin’s programmatic monetary policy changed—and the issuance of new tokens in half was cut in half, restricting supply.

One possible reason, according to J.P. Morgan strategist Nikolaos Panigirtzoglou, is that the halving was already priced in. J.P. Morgan analysts already saw Bitcoin as well above their volatility-adjusted comparison to gold, which would imply prices a $45,000 price.

A more bullish explanation could be that previous Bitcoin halvings have led to a more delayed cycle of price rises.

”The recent halving event has led to short-term downward price movements, a pattern observed in previous occurrences. Following this, there is typically a 9–12-month period of upward momentum, leading to the peak of the market cycle,” wrote Matteo Greco, research analyst at Fineqia International, in a recent research note.

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Beyond Bitcoin,

Ether

—the second-largest crypto—was off 0.1% to $3,008.75. The Securities and Exchange Commission is expected to make a final decision on Ether spot ETFs this month. Optimism, however, has been muted for a quick follow-up to the approval of Bitcoin ETFs which sent Bitcoin to all-time highs.

“Market participants anticipate that the SEC will likely withhold approval for these products, despite approving BTC ETFs in January. Concerns over the liquidity of ETH’s spot and futures markets, along with its past classification as a security by the SEC, contribute to the skepticism surrounding swift approval,” wrote Fineqia’s Greco.

Smaller cryptos or altcoins were mixed Thursday, with

Cardano

down 0.8% and

Polygon

off 0.5%%, while

Dogecoin

had dipped 0.1%.

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Write to Adam Clark at adam.clark@barrons.com



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