Preparing for the Halving
Next week, bitcoin's inflation rate will programmatically be cut in half—an event that happens just one out of every four years. As a result, the mining rewards will drop from 6.25 bitcoin per mining block to 3.125 bitcoin. This week, we focus on what that might mean for markets with views from our trading desk and research team.?
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In this episode, Joshua Frank, Co-Founder and CEO of The Tie, unravels the complexities and anticipates the future trends of the crypto market. We look at the significance of the Bitcoin halving and ask the questions everyone is interested in knowing: Is it as impactful as it's touted to be, and what might the market response signal for future cycles?
A deep dive into our research on the Halving from analyzing the prior halvings in November 2012, July 2016, and May 2020. Because halvings reduce the supply of new bitcoins, they are often viewed as bullish for the price of BTC. Price action around prior halvings supports this view: bitcoin gained an average of 61% in the six months leading up to prior halvings, and rose an average of 348% in the six months after halving. But, by digging deeper into these numbers, it’s clear that not all halvings are created equal.
Crypto markets have chopped lower along with equities and other risk assets following the Fed’s stance on continued caution toward rate cuts amidst the risk of reflation. In this environment, gold has been the largest winner, printing new highs amidst increased central bank buying, heightened geopolitical risks, and reflation concerns. Here’s our research team’s latest view on the macro environment.?
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