Bitcoin Traders Dismiss ‘Halving’ Event, Shift Attention to Larger Market Risks

Authored by Elizabeth Howcroft

LONDON (Reuters) – Despite widespread anticipation, Bitcoin’s halving event hasn’t significantly altered its market value, with experts suggesting on Monday that the digital currency’s price is more affected by overall market moods and global political events.

The crypto community had been keenly anticipating the “halving” – an algorithmic modification in the digital ledger of Bitcoin that happened around 0014 GMT on Saturday. This modification is expected to halve the pace at which new bitcoins are mined.

This critical update to Bitcoin’s blockchain protocol happens once every four years. Historically, some in the crypto sphere have associated past halving events with subsequent price surges, fostering expectations of a similar bullish response this time.

However, by 1415 GMT the same Monday, Bitcoin’s market price showed negligible change, trading at around $66,300. Despite a minor 1.2% growth in the preceding week and a 3.4% rise that day, Bitcoin has experienced relative uncertainty in its trajectory after peaking at a historic $73,794 the month before.

Mick Roche, a senior trader at Zodia Markets, which is part of Standard Chartered, noted, “The current geopolitical situations are casting a much broader shadow over Bitcoin prices than the halving effect. This specifically pertains to the recent de-escalation of tensions between Iran and Israel.”

Monday also saw global stocks regaining some ground, as investor confidence rebounded from prior concerns about potential escalations in the Middle East.

Eric Demuth, CEO of Bitpanda, a cryptocurrency brokerage based in Austria, highlighted Bitcoin’s increasing correlation with overall market trends. He also observed that there was no distinct pattern in retail investor behavior in response to the halving event.

“The demographics and behaviors of those investing in cryptocurrencies and technology stocks are converging,” Demuth explained.

There was a noted surge in Bitcoin’s recovery from its crashes in 2022, partly due to anticipations around U.S. regulatory endorsement of spot Bitcoin exchange-traded funds (ETFs).

Ben Laidler, a global markets strategist at eToro, pointed out that while Bitcoin is predominantly in the hands of individual investors, ongoing and future regulatory alterations could simplify Bitcoin acquisition for corporations, banks, and even central banks.

Despite the increasing mainstream interest, cryptocurrencies are still relatively specialized in terms of asset classification, their aggregate value hovering at about $2.5 trillion, as per CoinGecko’s market analysis.

Financial regulators continue to caution that cryptocurrencies are speculative, fraught with high risk, and present limited practical applications.

The crypto community is also observing to see whether the U.S. Securities and Exchange Commission will green-light spot ETFs for Ethereum, the second-largest digital currency. But according to Demuth and Roche, optimism for such an approval in May is dwindling.

(Reportation by Elizabeth Howcroft; Editage by Tommy Reggiori Wilkes and Mark Potter)