NOIDA (CoinChapter.com)—Bitcoin halving is just a week away. Traditionally, Bitcoin price action charts impressive bull runs post-halving. However, this might not be the case this time around, as indications pile-up of a calmer-than-usual response to the halving.
For the uninitiated, halving lowers the rate at which new Bitcoin coins are minted, reducing the new supply. The current block reward is 6.25 BTC, which will drop to 3.125 BTC once the halving occurs.
Historically, BTC price has nearly always followed a halving event with a bull run, though sometimes the rally has taken some time to materialize.
Bearish Cues As Bitcoin Halving Approaches
Market intelligence firm Santiment noted in an X post that the upcoming Bitcoin halving and the associated peak in social interest might lead to short-term volatility and possible price reversals for the BTC token.
However, the firm did not anticipate any major impact on Bitcoin prices. The recent approval of spot Bitcoin ETFs and BTC’s price painting a new ATH has piqued interest in the crypto token.
Moreover, Bitcoin’s run between February and March helped turn the wider market bullish, sparking a memecoin frenzy, among other things. Yet, the market has cooled down now, and with prospects of a rate cut in June fading, the crypto market is likely to remain a bit flat for the time being.
BitMEX founder Arthur Hayes suggested to traders that the immediate effects of the halving might be negative. Hayes bases his argument on the idea that when most market participants expect a specific outcome, the opposite often happens due to market dynamics.
In a blog, the ex-BitMEX CEO cautioned that the BTC price action directly before and after the halving could be negative, challenging the entrenched narrative that the halving will definitely lead to higher prices.
Furthermore, Hayes pointed out that the timing of the Bitcoin halving coincides with a period of tighter dollar liquidity, which could exacerbate the selling pressure on crypto assets.
The crypto expert’s warning would likely make market participants more cautious about the halving, which could mean a flat response to the event. Furthermore, if BTC price fails to rally post-halving, traders might panic and start selling, ensuring a negative outcome of halving for Bitcoin.
Is BCH A Warning Sign?
Meanwhile, Bitcoin’s estranged brother, Bitcoin Cash, recently underwent its second halving event. However, the BCH price action post-halving could be a warning sign for traders hoping for a halving-fueled Bitcoin bull run.
BCH experienced a fleeting rally, peaking at $715 on April 6 after its halving event. Since then, the price has retracted by 27% to $516.
The decline is mirrored in the futures market, where the open interest in BCH futures plummeted by 46% to $467 million since the halving event, as per Coinglass.
Additionally, negative funding rates early this week across major exchanges indicate a retreat from bullish positions; such rates suggest that perpetuals are trading below the spot price of the underlying asset. Since the BCH halving, traders have liquidated over $12 million in long positions.
In comparison, short positions only saw over $7.5 million in liquidations.
If BCH’s price action post-halving is any indication, then Bitcoin price action could be in trouble come the halving.
With diminishing chances of a Federal Reserve rate cut, GBTC outflows, and nearly flat market conditions. it is likely that BTC price action would factor in the halving impact later than it ordinarily did in the past. Traders should play the field after proper research.
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