Title: Halving Challenge: $150,000 Target Price
Impact of Halving on Price
Impact on Miners
With less than three days remaining until Bitcoin’s halving, a report by AB Bernstein analysts Gautam Chhugani and Mahika Sapra, sent to clients today, suggests that Bitcoin’s price will continue to rise after the halving, challenging the $150,000 target price. The report states:
“It is worth noting that this view echoes Bloomberg ETF analyst Eric Balchunas’ perspective. According to reports, Eric Balchunas stated in an interview with The Block last month that the Bitcoin spot ETF will land on the trading platforms of major brokerage firms in the coming months. This will bring more exposure and channels for the Bitcoin spot ETF, becoming a catalyst for a new round of Bitcoin price increase.”
Historically, Bitcoin’s halving events have been significantly correlated with price volatility of the cryptocurrency. While not a direct causal relationship, these events often foreshadow a large-scale bull market in the Bitcoin market.
The Bernstein analysts state that the halving itself does not lead to an increase in Bitcoin’s price, but rather the emergence of new demand is crucial. Despite miners receiving fewer Bitcoin rewards after the halving, resulting in a decrease in Bitcoin sold to the market, this potential selling pressure has significantly diminished over time. The report states:
“Analysts further supplement that demand catalysts usually emerge after the halving event, as seen in the liquidity during the post-pandemic period and Bitcoin purchases by companies such as Tesla, Square, and MicroStrategy in the 2020/21 cycle. The current cycle’s demand will be driven by the approval of the Bitcoin spot ETF and major global asset management companies.”
In terms of negative news regarding the impact on miners’ income, many stocks have fallen by 15-20% in the past 30 days, and no publicly traded cryptocurrency mining company has outperformed Bitcoin since the beginning of the year. Some miners still enjoy historically high revenues in USD and have stable balance sheets with relatively low debt before the halving.
Bernstein predicts a reduction in mining power of approximately 7% after the halving, with mining power concentrated in four major publicly traded mining companies: CleanSpark, Marathon, Riot Platforms, and Cipher Mining.
However, the analysts add that if Bitcoin’s price substantially drops (e.g., returns to the $40,000 or lower price level), we may see a more drastic decrease in network hash rate. Nevertheless, Bernstein believes that the likelihood of such adverse circumstances is low, as the company’s analysts believe that the structural demand for ETFs has not yet been fully unleashed (with actual inflows of $12 billion this year and an estimated $80 billion expected from 2024-25).
The analysts reiterate their view that post-halving, with increasing market share, strong revenues, and capacity pipeline growth, top public mining companies’ stock performance may surpass Bitcoin in the next 12 months.
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