Goldman Sachs and Bernstein’s Comments on Bitcoin Halving: Don’t Trust It!

Goldman Sachs ve Bernstein, Bitcoin Halving’ini Yorumladı: Güvenmeyin!
Goldman Sachs ve Bernstein, Bitcoin Halving’ini Yorumladı: Güvenmeyin!

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Bitcoin is on the verge of its fourth mining reward halving, scheduled for April 19-20, 2024. This event, which occurs every four years, halves the number of Bitcoins issued per block mined, effectively slowing the rate at which new Bitcoins come into circulation. Historically, halvings have been followed by significant price increases for Bitcoin, leading many to believe the same will happen this time around. But some experts caution against blindly trusting past performance.

Bullish bet on Bitcoin miners

Investment research firm Bernstein predicts that there will be an increase for Bitcoin after the halving. They propose buying shares of Riot Platforms (RIOT) and CleanSpark (CLSK), two publicly traded Bitcoin mining companies. According to Bernstein, these companies’ superior execution and industry-leading self-mining hashrate position them to outperform in the coming months. Hash rate refers to the collective computing power dedicated to ensuring the security of the Bitcoin network.

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Bernstein acknowledges the current “miner fear factor” stemming from concerns about profitability following the reward reduction. But they highlight the role of exchange-traded funds (ETFs) in driving demand for Bitcoin. The recent approval and launch of spot Bitcoin ETFs has already triggered significant price growth, potentially frontloading some of the usual post-halving rally.

“Caution” note from Goldman Sachs

While Bernstein is bullish, investment banking giant Goldman Sachs is recommending a more measured approach. They acknowledge the historic price increases following past halvings but highlight the changing timelines and significant difference in current macroeconomic conditions.

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Goldman Sachs underlines that the current high inflation, high interest rate environment contrasts sharply with loose monetary policies and ample liquidity that fueled previous post-halving rallies. If inflation proves to be resilient and the US Federal Reserve raises interest rates above 5%, it may cause the risk appetite in the overall market to decrease.

Conclusion: It is necessary to be balanced

As reported, the upcoming halving presents a unique situation. The launch of Bitcoin ETFs has already led to significant price appreciation, potentially impacting the size of the post-halving surge. However, the current macroeconomic environment creates uncertainty for risky assets like Bitcoin. Although history points to a potential price increase, investors need to be careful about extrapolating past performance.

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The medium-term outlook likely depends on the continued adoption of Bitcoin ETFs and their impact on the supply-demand dynamic. The halving itself serves as a “psychological reminder” of Bitcoin’s limited supply, but it is the interplay of market forces that will ultimately determine Bitcoin’s price trajectory.

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Goldman Sachs and Bernstein’s Comments on Bitcoin Halving: Don’t Trust It!