• Bitcoin (BTC) Reward Halving Partially Priced In, No Big Rally Expected After the Event: Deutsche Bank
• Crypto prices likely to stay high in anticipation of spot ether ETF approvals, central bank rate cuts, and regulatory changes
• The report said no big rally is expected after the Bitcoin halving event
Deutsche Bank recently released a report stating that the upcoming Bitcoin halving event has already been partially priced in by the market. The report predicts that there will likely not be a major price rally after the halving occurs in May 2020.
Background on Bitcoin Halving
The Bitcoin halving refers to the periodic reduction in the block reward that miners receive for processing transactions on the Bitcoin network. The block reward is cut in half approximately every 4 years, reducing the rate of new Bitcoin production and supply.
There have been two previous Bitcoin halvings, in 2012 and 2016. After both events, the Bitcoin price saw significant rallies in the 12-18 months that followed. Some speculate that this was related to the reduced supply rate.
Deutsche Bank’s Analysis
Deutsche Bank analysts say the 2020 halving has already been “partially priced in”, meaning the market has factored it in to some extent.
They point out that the 2016 halving sparked a price rally when it was still a novelty. Now that the market expects periodic halvings, the price impact may be reduced.
The report states that Bitcoin’s failure to rally in Q1 2020 despite macroeconomic turmoil also suggests limited upside potential after the halving.
Other Factors to Support Crypto Prices
While Deutsche Bank predicts limited upside from the halving itself, they said other factors should support crypto prices generally, including:
- Expected approvals for ether and bitcoin ETFs in 2020
- Continued rate cutting by central banks
- Favorable regulatory changes worldwide
The report concludes crypto prices will likely stay elevated due to these other factors, despite muted impact from the halving.
Conclusion
Deutsche Bank believes the upcoming 2020 Bitcoin halving has already been priced in and anticipates limited impact on Bitcoin price. They cite Bitcoin’s failure to rally in Q1 2020 and the fact that halvings are now expected as reasons why upside may be minimal after this halving occurs. However, the report states other factors like ETF approvals and rate cuts should support crypto prices in 2020.
