04/18 update below. This post was originally published on April 17
Bitcoin
The bitcoin price has dropped back from its latest all-time high of over $70,000 per bitcoin, falling sharply over the weekend as the Middle East conflict threatened to explode into a wider war.
Now, as bitcoin hurtles toward its next supply cut—known as a halving—Goldman Sachs
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The bitcoin price has previously climbed following bitcoin's three other halving supply cuts.
"Historically, the previous three halvings have been accompanied by bitcoin price appreciation after the halving, although the time it took to reach the all-time highs differs significantly," Goldman analysts wrote in a note seen by Coindesk.
"Caution should be taken against extrapolating the past cycles and the impact of halving, given the respective prevailing macro conditions."
Previous bitcoin halvings have come at a time of loose Federal Reserve monetary policy while this time around the Fed is battling stickier than expected inflation. Fed chair Jerome Powell has stressed the Fed won't cut interest rates until he has "greater confidence" that inflation is moving towards the Fed's 2% target, meaning higher-for-longer rates.
04/18 update: Analysts at Wall Street giant JPMorgan have joined Goldman Sachs in warning the bitcoin price could fall in the aftermath of the looming bitcoin halving.
"We do not expect bitcoin price increases post-halving as it has already been priced in," JPMorgan analysts led by Nikolaos Panigirtzoglou wrote in a note to clients seen by The Block. "In fact, we see a downside for the bitcoin price post-halving for several reasons."
JPMorgan analysts pointed to the bitcoin price trading above its volatility-adjusted price of $45,000 compared to gold, appearing to be in "overbought conditions," according to an analysis of open interest in bitcoin futures, and a lack of crypto venture capital funding so far this year.
"The technical picture for bitcoin is rather worrying, as we saw no rebound after the price drop on Friday and Saturday," Alex Kuptsikevich, FxPro's senior market analyst, said in emailed comments. "On the contrary, the market seems to be getting used to current prices in anticipation of a halving."
The bitcoin halving is now just two days away with the bitcoin block reward to miners due to be cut to 3.125 bitcoin from 6.25 bitcoin currently. This will reduce the daily supply of new bitcoin coming onto the market from around 900 bitcoin to 450 bitcoin.
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The bitcoin price has rocketed higher over the last year, breaking its previous trend of climbing ... [+]
The bitcoin price has already broken previous trends in climbing ahead of this halving, whereas it's previously been flat or fallen ahead of the three supply cuts in 2012, 2016 and 2020.
The bitcoin halving supply cut is also coming hot on the heels of a fleet of new spot bitcoin exchange-traded funds (ETFs) making their Wall Street debut—pushing up demand for bitcoin as the funds buy billions of dollars worth of the cryptocurrency.
"Whether [the] bitcoin halving will ... turn out to be a 'buy the rumour, sell the news event' is arguably less impactful on bitcoin's medium term outlook, as bitcoin price performance will likely continue to be driven by the said supply-demand dynamic and continued demand for bitcoin ETFs, which combined with the self-reflexive nature of crypto markets is the primary determinant for spot price action," Goldman's team wrote.
