Historically, bitcoin (BTC) hit new all-time highs after the halving.
The market is expecting the outcome of the US presidential elections.
CME Group, the operating company of the Chicago Mercantile Exchange, expressed optimism about the future of bitcoin (BTC) and raises the possibility of the digital asset reaching a new all-time high in the short term.
This is how he explained it through a article Jim Iuoriomanaging director of TJM Institutional Services, who mentions the BTC halving as one of the reasons to bet on the currency created by Satoshi Nakamoto.
As CriptoNoticias already explained, the halving is the event that reduces the issuance of bitcoin by half every four years and, as has happened historically, it has always gone accompanied by a significant price increase in the months before and after to a new ATH.
In the following technical indicator of TradingViewyou can see the historical behavior of the BTC price before and after the halving. The green painted areas mark the beginning of the bullish cycle which, if history repeats itself, would be in January 2025.
This is a bullish factor for the BTC price not only because it could increase demand, but also because it influences market psychology. Its effect has to do with the expectations of investors, who behave following historical patterns, which can be seen in the previous graph. “This feature is often cited as a key factor in maintaining bitcoin’s value proposition within the space,” Iuorio describes.
Likewise, it highlights that historically new historical highs (ATH) of BTC have been recorded between six and twelve months after each halving. However, it indicates that the number of events is limited, with only three previous, and we are currently experiencing the effects of the fourth.
That is why Iuorio believes that, to evaluate the potential impact of the 2024 halving, It is crucial to consider the context of the digital asset market in recent years.
In his article, he recalls that at the end of 2022, the price of bitcoin fell by around 77% from its previous all-time high, influenced by the collapse of major cryptocurrency companies, such as FTX, and the decision of the United States Federal Reserve (Fed) to raise interest rates to control inflation.
“At the end of 2022, bitcoin and the broader cryptocurrency market experienced a sharp decline, with the price of bitcoin plummeting approximately 77% from its previous all-time high.”
Jim Iuorio, managing director of TJM Institutional Services.
However, for the specialist, the narrative has changed since financial institutions such as VanEck and BlackRock made moves to increase their exposure to BTC through exchange-traded funds (ETFs) based on the digital currency in the United States. Since their launch, these financial instruments have accumulated more than 21 billion dollars.
Thereafter, BTC had a historic rally of more than 300% and reached an ATH of $73,700 in March 2024, a month before the halving.
For Iuorio, there are also two events that could act as a catalyst for the price of BTC: the in-person elections in the United States and a new cut in the interest rate.
Eyes on November 5
Next week the presidential elections will take place in the United States, with the Democratic Party candidate, Kamala Harris, and her Republican Party candidate, Donald Trump, as protagonists.
According to Polymarketthe cryptocurrency betting platform, The former president is up in the preview, something that can be beneficial for the digital asset market.
As CriptoNoticias already reported, during his campaign Trump showed a stance in favor of cryptocurrencies and promised measures to help the industry. A victory for the Republican candidate could give a boost to the price of BTC.
In this regard, Iuorio maintains that the elections will have an impact “especially with regard to the regulatory environment.”
Harris, Joe Biden’s current vice president, is part of the administration that has Gary Gensler as head of the Securities and Exchange Commission of that country (SEC), which has had legal disputes with exchanges such as Binance, Kraken or Coinbase.
On the other hand, the specialist mentions the possibility that the Fed will make another cut in the interest rate, which is currently around 5% annually.
When interest rates fall, investors tend to migrate their holdings into assets considered risky such as stocks, BTC or cryptocurrencies to obtain higher returns. This is because the yield on Treasury bonds, known as “the safest investment in the world,” decreases.
Likewise, a cut in rates lowers the cost of loans, making it easier for investors to obtain capital to allocate to BTC and the rest of the digital assets. Thus, liquidity in the market increases.
“These factors, in addition to this year’s halving, could influence the price of bitcoin during the rest of 2024,” completes the author of the article.
