Investing.com – With the halving event just around the corner, a report from Citi Research suggests that the impact on Bitcoin price may be less noticeable than in previous cycles. The report also delves into various aspects of the cryptocurrency market as the Bitcoin halving, scheduled for April 20, approaches.
Bitcoin halving, an event that halves the reward for mining new blocks, is a mechanism intended to control the supply of Bitcoin and has historically been associated with price increases. However, Citi Research notes that unlike Bitcoin, it has not shown consistent performance after halving events. With the reward falling from 6.25 BTC to 3.125 BTC per block this year, the market may not see those big price jumps like we used to see.
According to Citi Research, one of the main drivers of Bitcoin price has been the influx of spot Bitcoin ETFs. The report notes that through April 12, there have been $12.6 billion in net inflows into these new vehicles, which play a role in weekly price increases. Despite these inflows, the broader cryptocurrency market is showing signs of lower participation, as reflected in trading volumes and open interest metrics.
The research also highlights a contrasting scenario in network activity between Bitcoin and Ethereum. The latter's network activity has seen an uptick, which is not reflected in Bitcoin, where activity remains relatively moderate.
In terms of economic influence, the report indicates that macroeconomic factors that previously aligned with cryptocurrency movements now show less correlation. This decoupling suggests that investors may need to adjust their strategies when considering cryptocurrency investments.
Additionally, public interest, as measured by search trends, has not peaked, indicating low anticipation for the upcoming halving compared to previous events. This lack of greater public interest could translate into less dramatic market movements after the halving.
Citi Research concludes that while the Bitcoin halving remains a major event, its impact on Bitcoin price and market dynamics may be less pronounced this year.
