Why is Bitcoin price quiet after the 'halving'?

Instead of skyrocketing like the previous three "halving" periods, this year's most anticipated event did not help Bitcoin price improve significantly.

Around 7 a.m. this morning, Bitcoin (BTC) completed its " halving ," according to cryptocurrency data and analysis company CoinGecko. "Halving", an event that usually occurs every four years, was pre-programmed into the Bitcoin network by creator Nakamoto Satoshi. For every 210,000 units mined, the reward for miners will be halved. Combined with the finite supply (maximum 21 million units), the rewards are getting smaller and smaller creating scarcity for BTC to ensure supply is always controlled.

Contrary to many predictions, the market price of this currency was quite stable when the event took place, keeping around 63,700 USD per unit. BTC has hardly had any strong price increases recently. Yesterday, the market price dropped to the lowest level of 59,685 USD and then quickly increased again to above 65,000 USD.

Typically, it takes several months after an event for Bitcoin prices to see a big jump because miner reward reductions take time to seep into the market. In the previous three "halving" rounds, it took an average of about 5 months for the cryptocurrency to increase in price and could maintain the upward momentum for about 7 months.

However, at this "halving", analysts predict that Bitcoin price fluctuations will be different because it has recorded many significant price increases, even reaching record highs before the event. Therefore, price expectations surrounding the "halving" seem to be dampened.

Brett Hillis - financial technology expert at Reed Smith, said: "It is difficult to say whether the previous record high can limit Bitcoin's price increase after 'halving' or not."

Meanwhile, JP Morgan analysts wrote in a new report released this week: "We do not expect Bitcoin price to increase after the 'halving' event as it completes the valuation cycle."

On the contrary, they expect the price of BTC to decrease after the "halving" because the currency has fallen into an overbought state and venture capital funding for the cryptocurrency industry is gradually "sinking" this year. Goldman Sachs added that for Bitcoin to increase in price like previous "halving" events, macro conditions need to support investors so they have a risk-taking mentality.

Another important reason why this "halving" is quiet is that the US Federal Reserve (Fed) is still quite hesitant about the possibility of reducing interest rates. This makes investors cautious when pouring a lot of money into BTC and other risky assets.

Bitcoin enthusiasts have long been eagerly awaiting this event because after previous "halvings" that occurred in 2012, 2016 and 2020, the price of the world's largest digital currency has always increased sharply. Chris Gannatti - head of global research at asset management company WisdomTree, said "halving is one of the biggest events in cryptocurrency this year".

But many people are skeptical and consider it just a technical change, introduced by speculators to increase cryptocurrency prices.

Financial regulators have long warned that Bitcoin is a high-risk asset, with limited real-world uses, although more and more are starting to adopt inter-trade products. linked to BTC. Andrew O'Neill, a cryptocurrency analyst at S&P Global, said he was "a bit skeptical about the lessons that can be learned when predicting prices from previous 'halvings'". According to this expert, that is just one of countless factors that could drive Bitcoin's price.

The "halving" comes after Bitcoin's price surge to an all-time high of more than $73,750 in March. The currency also experienced a price increase that lasted most of 2023 with a sharp recovery after crash in 2022.

The market price of Bitcoin and other cryptocurrencies is supported by excitement surrounding the US Securities and Exchange Commission (SEC) decision in January to approve spot Bitcoin ETFs , as well as expectations that central banks will The central government will cut interest rates. But recently, this cryptocurrency is under great pressure due to increasing conflicts in Iran and Israel, causing a domino effect across all capital markets.