Bitcoin Halving's Aftermath: Glass Half Empty or Glass Half Full?

Bitcoin's big day has come and gone but like most events in the crypto calendar, the build-up was far more exciting than the aftermath. In typical "buy the rumour, sell the news" fashion, the market has long assumed the Bitcoin halving was already priced in. It's not like the event sprung up on us; the event was scheduled since Bitcoin's inception.

Since 19 April, the date Bitcoin halved its block rewards for the fourth time, Bitcoin's price has increased around 2%, adding to its total percentage increase of almost 8% over the past five days. Whilst any increase is positive, it's clear the occurrence of Bitcoin halving did not serve as a catalyst for Bitcoin's price growth, which still has 13% more to increase to reach its all-time high of $75K last month.

Nonetheless, with Bitcoin halving now in the rearview mirror, how has the event impacted the market going forward?

2012's halving saw Bitcoin's price jump from $12.35 to $127 just 150 days later. In 2016, 1 BTC was trading at $651 before jumping to $758. Four years later, Bitcoin hit $8,821 ahead of its halving and $10,943 shortly after. So what now?

What the Experts Are Saying

Binance CEO Richard Teng has described the fourth Bitcoin halving as a "unique" event that sits among industry-changing shifts this year.

“This year’s halving is unique in that it comes amid a series of other significant events in the Bitcoin and wider crypto ecosystem,” Teng told The Block.

“In addition to the ETF breakthrough, which has spurred institutional interest and participation, another major current in crypto today is the boom of the Layer 2 and DeFi activity on the Bitcoin network, fueled by the popularity of the Ordinals protocol and Bitcoin inscriptions,” he added.

Teng also highlighted how Bitcoin's price rose after each previous halving but warned that the approval of Bitcoin ETFs has already driven Bitcoin's price up considerably.

“While the points above amount to an optimistic outlook for BTC and the crypto market in general, it is important that investors, especially newcomers to the crypto space, manage their expectations,” Teng said.

“Immediate price shifts in the wake of the halving are not warranted, and its fundamental importance will manifest itself in longer trends in value, liquidity, adoption, and crypto’s standing and acceptance as an asset class.”

Kok Kee Chong, CEO of AsiaNext, echoed a similar message. "What differentiates this from previous halvings is the fact it is now coupled with increased demand through institutional adoption especially through US BTC ETF markets," Chong said in a quote to Blockhead.

The slight price drop Bitcoin experienced immediately after the event isn't anything to worry about either, Chong reaffirmed. "The price drop is often a symptom of investors selling/shorting at the event. This is not unexpected, and we should see some recovery in the price in the coming weeks. The US buy side is expected to drive price demand long-term and is not looking at short-term speculative strategies," he said.

Metalpha's senior analyst Lucy Hu remains optimistic too. "The market witnessed the fourth Bitcoin halving over the weekend and the price rebounded quickly above $64k after touching $59k. Based on the empirical pattern, Bitcoin could reach a new high-time high in the post-halving event," she told Blockhead.

It's Not Just Price

Bitcoin's value goes beyond its stored value as an asset. Ordinals were all the rage last year but fans of the Ethereum NFT alternative have been left wondering how the halving will impact their beloved tech. Well, good news for Ordinals fans: Bitcoin blocks will continue to be produced so it's business as usual.

If anything, the launch of Runes should be the focus of Ordinal loyalists. With the Runes protocol coinciding with Bitcoin halving, some projects are offering airdrops to capitalize on the initial hype. A look at Ordinals on the OKX Marketplace shows 24 projects, including popular ones such as Runestone and Ape Odyssey, offering Runes airdrop to holders.

Runes open doors for creating various tokens on Bitcoin, potentially expanding its use cases and attracting new users. This could result in increased utility for Bitcoin.

Furthermore, by minimizing unnecessary data storage, Runes aim to make holders benefit from more efficient and scalable Bitcoin transactions. In addition, Runes get to benefit from Bitcoin’s robust security architecture.

Bitcoin's halving also appears to be having an effect on Bitcoin transaction fees. On-chain data from Mempool.space shows that transaction fees are between $9 to $11. When Bitcoin halving was initially triggered, these fees went as high as $170.

19 April saw Bitcoin transaction fees amounting to $7.7 million but one day later, this figure surged to $81 million. As of 22 April, the fees have added to $22 million.

Blockhead's BRN Says...

There are many voices out there, capitalising on the event to chime in with their prophetic wisdom. But the most important "expert" you need to hear from is Blockhead's in-house analyst. With the market continuing to price in the halving event, further price rises can be expected for BTC, our analyst believes.

"The chart indicators noted the bullish sentiment with the Moving Average Convergence Divergence (MACD) maintaining its pre-halving bullish crossover. Likewise, the Relative Strength Index (RSI) hinted at buying pressure in the short term with a reading of 51. With BTC trading close to a resistance level at $64.7k, it is vital for buyers to scale this hurdle for further gains," he explained.

According to Blockhead's in-house research arm, brn, Bitcoin halving is likely to be a non-event in terms of price movement but could impact volatility.

“Firstly, the put/call ratio of .70 (volume) indicates that some investors are hedging their positions against expected volatility surrounding the halving. This cautious approach suggests that while optimism exists, investors are also preparing for potential market swings,” a brn analyst explains.

“Moreover, the upcoming options expirations on April 26 and May 28, occurring one and five weeks after the halving, add to the uncertainty. Options expirations often lead to increased market volatility as traders adjust their positions, potentially amplifying price fluctuations during this period.”