In anticipation of the upcoming Bitcoin halving event, which is expected later this month, Marathon Digital CEO Fred Thiel believes that the price impact may already be somewhat felt in the market.
Thiel shared his insights in a recent interview with Bloomberg, in which he discussed potential catalysts for further price increases and their implications for the mining industry.
Bitcoin halving effect dampened by ETF surge?
The “halving” event, a software code update that usually occurs every four years, is known to be the main driver of Bitcoin’s price increase. The update will halve the block reward for miners, meaning they will receive fewer bitcoins as a reward for validating transactions on the blockchain.
However, Thiel noted that the impact of the halving may not be as significant this time, as the recent approval of Bitcoin exchange-traded funds (ETFs) has already attracted substantial capital to the market. Thiel explained:
ETF approvals, which have been hugely successful, have attracted capital to the market and essentially brought forward the price increases that we would normally have seen three to six months after a halving. So I think we’re seeing some of that now and that’s driving some of the demand.
While the halving event is expected to reduce the daily supply of new bitcoins by roughly 450, Thiel believes the price impact could be relatively modest.
However, Marathon’s CEO expressed enthusiasm for the positive price trend leading up to the halving, noting:
As miners, we’ve been very excited to go to the halving, where the prices never went down before the halving, instead the prices went up, so obviously everyone is maxing it out.
Balancing ETF flows and past partial patterns
Thiel’s observations come amid significant inflows into Bitcoin ETFs, which have generated nearly $12 billion in just three months of trading in the United States.
While this influx has contributed to the current price increase, historical data shows that Bitcoin still has significant upside potential leading up to The Halving.
To get a comprehensive understanding, it is important to examine the recent rise in the value of Bitcoin, which has increased by nearly 370% from a bear market low (ATH) of $15,400 on March 14, 2024 to $73,700.
In conjunction with these increases, past partial events provide valuable insight into Bitcoin’s price movements and potential for crossing the $100,000 milestone.
During the first half in November 2012, Bitcoin price saw an impressive 8,753% increase last year from a low of $13 to a peak of $1,152.
Similarly, the second halving event in July 2016 saw Bitcoin price rise from $664 to a new ATH of $17,760, representing a 2,580% gain after the halving.
The most recent halving event in May 2020 saw the price of Bitcoin hit a milestone of $67,000, rising from a low of $9,730, a significant gain of 593% after the halving.
In perspective, while the likely scenario outlined by Thiel suggests that the price halving could be partially due to the impact of ETF flows, historical patterns suggest that Bitcoin still has plenty of room to run ahead of the event.
Many market pundits have also set their price target for this bull run at the coveted $100,000 level in light of the upcoming halving event.
However, it remains to be seen how the price of Bitcoin will react considering factors such as ETFs, historical data and potential market dynamics.
Currently, BTC is trading at $68,400, down 0.4% from yesterday’s price.
Featured image from Shutterstock, chart from TradingView.com