Goldman Sachs analysts believe that whether the upcoming Bitcoin halving will turn out to be a “buy the rumor, sell the news” event may have less impact on bitcoin’s medium-term outlook. They explained that the bitcoin price performance will likely continue to be driven by the supply-demand dynamic and continued demand for spot bitcoin exchange-traded funds (ETFs), “which combined with the self-reflexive nature of crypto markets is the primary determinant for spot price action.”
Goldman Sachs on Potential Price Impact of Bitcoin Halving
Global investment bank Goldman Sachs has advised against extrapolating information from past Bitcoin halving cycles to forecast the future price of the cryptocurrency.
Goldman Sachs’ FICC (Fixed Income, Currencies and Commodities) and Equities team stated in a note to clients last week that previous bitcoin bull runs were likely not solely triggered by the mining-reward halving; macro factors probably played a significant role. In the current cycle, the sustained BTC gains may rely on substantial inflows into spot exchange-traded funds (ETFs).
“Historically, the previous three halvings have been accompanied by BTC price appreciation after the halving, although the time it took to reach the all-time highs differs significantly,” the Goldman analysts detailed, emphasizing:
Caution should be taken against extrapolating the past cycles and the impact of halving, given the respective prevailing macro conditions.
The investment banking giant further pointed out that the macroeconomic landscape during the previous halvings differed from today’s environment characterized by high inflation and high interest rates. Therefore, for historical patterns to replicate, macroeconomic conditions must favor risk-taking, which is not the current situation.
According to Goldman Sachs, Bitcoin halving is a “psychological reminder to investors of BTC’s capped supply.” The bank’s analysts asserted: Whether BTC halving will next week turn out to be a ‘buy the rumour, sell the news event’ is arguably less impactful on BTC’s medium term outlook.
“BTC price performance will likely continue to be driven by the said supply-demand dynamic and continued demand for BTC ETFs, which combined with the self-reflexive nature of crypto markets is the primary determinant for spot price action,” they concluded.
Despite predictions of a short-term “sell the news” event at the Bitcoin halving, crypto industry leaders including Bitwise CIO Matt Hougan and Crypto.com CEO Kris Marszalek remain bullish on bitcoin’s long-term prospects.