Posted by Xoken.org – With the Bitcoin halving event imminent, a report from Citi Research suggests that the impact on Bitcoin prices may not be as great compared to previous cycles. The report also examines various aspects of the cryptocurrency market ahead of the Bitcoin halving, scheduled for April 20.
Bitcoin halving, an event that reduces the reward for mining new blocks by half, is a mechanism intended to control the supply of Bitcoin and has historically been associated with price increases. However, Citi Research points out that, unlike Ethereum, Bitcoin has not shown consistent performance post the halving event. With rewards dropping from 6.25 BTC to 3.125 BTC per block this year, the market may not see the huge price spike it usually does.
According to Citi Research, one of the main drivers of Bitcoin prices is inflows into spot Bitcoin ETFs. The report noted that as of April 12, there was $12.6 billion in net inflow into these new vehicles, which played a role in the weekly price increase. Despite these inflows, the broader cryptocurrency market is showing signs of decreasing engagement, as reflected in trading volumes and open interest metrics.
This research also highlights contrasting scenarios in network activity between Bitcoin and Ethereum. Ethereum network activity saw an increase, which was not reflected in Bitcoin, where activity remained relatively weak.
In terms of economic influence, the report shows that macroeconomic factors that previously aligned with cryptocurrency movements now show less correlation. This separation suggests that investors may need to adjust their strategies when considering cryptocurrency investments.
Additionally, public interest as measured by search trends has not yet peaked, indicating lower anticipation of the upcoming downturn compared to previous events. This lack of high public interest could translate into less dramatic market movements after the halving.
Citi Research concluded that while the Bitcoin halving remains a major event, its impact on Bitcoin prices and market dynamics may be less pronounced this year.