Expect price impact, mining challenges and long-term outlook

The highly anticipated Bitcoin Halve opportunity is close, bringing heightened expectations regarding the long-term impact on the Bitcoin price.

However, there are concerns that this quadrennial event may already be priced in, as Bitcoin recently hit an all-time high of $73,700 on March 14th.

This surge broke the pattern of previous Halvings, where Bitcoin had never surpassed its previous ATH prior to the event. However, historical data shows significant price increases in the year following previous Halvings.

Experts predict delayed Bitcoin halving price impact

Analysts argue that the compounding impact of reduced issuance takes several months to materialize, suggesting that the Halving itself will not cause a significant rally before or immediately after the event.

Deutsche Bank analysts share this sentiment, stressing that significant price increases have typically occurred in the run-up to previous Halvings rather than immediately afterward.

Another factor to consider is the increased production costs for Bitcoin miners due to the Halving. Like the mining reward decreases, participation in the mining process becomes less profitable.

This has historically led to a decrease in the hashrate, the total computing power used for Bitcoin mining. JPMorgan analysts predict that production costs could rise to an average of $42,000 after the Halving.

One JPMorgan analyst wrote: “This estimate is also the level we expect Bitcoin prices to move to once Bitcoin Halving-induced euphoria dies down after April.”

While these factors can affect short-term price movements, historical data shows that the price of Bitcoin has experienced significant increases in the year following previous Halvings.

The respective price increases for the three previous halvings were 8,760%, 2,570% and 594%. However, it is important to note that each successive halving has a decreasing impact on the new supply of Bitcoin.

Mining Industry Shake-Up

In the mining sector, Halving could lead to significant revenue losses, estimated at around $10 billion per year.

According to Fortune, publicly traded miners took measures to increase their resilience, diversify their offerings and optimize their operations. However, mining stocks have faced challenges, with some experiencing significant declines.

While larger miners may undergo a period of adjustment, smaller miners and pools may be pushed offline. This could result in a larger market share for the surviving miners.

Experts at private asset management firm Bernstein expect the mining industry to consolidate, with “smaller and less efficient players” possibly selling assets to raise capital and strengthen their balance sheets.

The increased market dominance of the surviving miners are expected to be profitable over the long term, especially with the continued structural demand for Bitcoin from ETFs.

Timing of the Bitcoin Bull Market Peak

Cryptocurrency analyst Rekt Capital provided insights into the potential timing of Bitcoin’s bull market peak based on historical Halving cycles and the current acceleration seen in the market.

According to to Rekt Capital, Bitcoin has traditionally peaked in the bull market around 518-546 days after the Halving event.

However, the current cycle has shown signs of unprecedented acceleration, with Bitcoin surpassing previous all-time highs approximately 260 days ahead of historical norms. Nevertheless, the recent “pre-Halving retrace” has delayed the cycle by about 30 days and more.

Taking this accelerated perspective into account, if Bitcoin’s bull market peak is measured from the moment that it’s old all time high, it can occur 266-315 days later. As Bitcoin hit new all-time highs in March, this points to a potential bull market peak in December 2024 or February 2025, according to Rekt’s analysis.

Both perspectives carry meaning throughout the cycle, especially if the accelerating trend continues. However, prolonged pullbacks or periods of consolidation can slow the cycle, potentially pushing the expected bull market peak further into the future.

At the time of writing, BTC was trading at $64,300, higher than the $59,000 mark reached in the early hours of Friday.

Featured image from Shutterstock, chart from TradingView.com