Goldman Warns Against Blindly Using Past Bitcoin Halvings to Forecast Prices

Crypto News- As the countdown begins for Bitcoin’s fourth mining-reward halving, excitement brews among crypto enthusiasts worldwide. With just two days left, anticipation is high as this quadrennial event is expected to slash BTC’s per block emission to 3.125 BTC from 6.25 BTC, effectively halving the pace of new supply. It’s a moment that has historically triggered massive multimonth rallies in Bitcoin’s price, sparking optimism within the crypto community.

Goldman Warns Against Blindly Using Past Bitcoin Halvings to Forecast Prices

However, amidst the fervor, a note of caution emerges from investment banking giant Goldman Sachs. In a recent communication to its clients, Goldman’s Fixed Income, Currencies, and Commodities (FICC) and Equities team urged against overreliance on past halving cycles for price predictions. While acknowledging the historical trend of BTC price appreciation post-halving, they emphasize the need to consider prevailing macroeconomic conditions.

Contrasting Macro Landscapes: Past Bitcoin Halvings vs. Today’s Economic Realities

The chart provided by Goldman highlights Bitcoin’s performance after previous halvings, showcasing varying timelines and magnitudes of price rallies. Crucially, the macroeconomic landscape during those periods differed significantly from today’s environment of high inflation and interest rates. Unlike previous halvings, where central banks’ money supply surged alongside near-zero interest rates, current conditions paint a different picture.

With interest rates in the U.S. exceeding 5% and market expectations veering away from rate cuts, the stage is set for a departure from past patterns. Despite Bitcoin’s impressive 50% rally this year and the record-high anticipation preceding the halving, some analysts speculate that much of the post-halving surge may have already been priced in. This sentiment is bolstered by the substantial inflows into U.S.-based spot exchange-traded funds (ETFs), which have created a demand-supply imbalance.

Goldman Sachs’ Perspective: Bitcoin Halving’s Psychological Impact and the ETF Factor

Goldman Sachs views BTC’s halving as a “psychological reminder” of its capped supply, with the medium-term outlook hinging on the uptake of ETFs. While the immediate impact of the halving remains uncertain, the team suggests that BTC’s price performance will continue to be shaped by supply-demand dynamics and the demand for BTC ETFs. Ultimately, whether the halving triggers a “buy the rumour, sell the news” event or not, Goldman emphasizes the enduring influence of these factors on Bitcoin’s spot price action.