(Kitco News) – The fourth Bitcoin (BTC) halving is anticipated to occur around 9 pm EST on Friday, according to the halving and analysis countdown page provided by 21.co.
The crypto community has been eagerly awaiting the event for several months now, and this cycle hasn’t disappointed as it saw Bitcoin record a new all-time high 45 days before the halving, a feat it had never achieved before.
The launch of multiple spot BTC ETFs in January has been credited with the historic rally, but on the flip side, the ETFs have also been assigned some of the blame for the recent price slump as inflows have moderated compared to their first two months of trading. Data provided by Flipside shows that the ETFs have collectively recorded outflows for the past five days as the halving approached.
Bitcoin ETF net flows in USD. Source: Dune Analytics
Multiple analysts, including those from JPMorgan and Deutsche Bank, see the price of Bitcoin trading sideways or declining post-halving, but according to Hunter Horsley, CEO of Bitwise Invest, “people are dramatically underestimating the halving,” and “The market has never priced it in before, and won't have priced it in this time.”
“For the prior 3 halvings, after investors spent months discussing if it was priced in, here's what happened in the 12 months after each halving: 2020: +5.4x; 2016: +2.8x; and 2012: +88x,” he said. “A $100k bitcoin is +67% from here.”
“The impact of the halving isn't based on the views of fully deployed existing holders,” Horsley said. “It's a function of if there will be meaningful consistent new demand, alongside the reduction in the daily availability of natural sellers.”
“From my seat, I see consistent new demand ahead in 2024 and the setup for an impactful halving,” he said, pointing to growing demand from the institutional crowd.
“Right now countless RIAs [registered investment advisors] and multi-family offices are buying Bitcoin and doing homework,” Horsley said in a follow-up tweet. “But almost none of them are saying anything about it publicly. You can scour LinkedIn or firm websites, and you will be hard-pressed to find mention of it.”
“This week I met with a large firm that's putting Bitcoin in some client accounts and thinking about if there's a role for it in a model, and then my next meeting was with a smaller firm that asked if any of their peers are doing anything or if it's still all just retail,” he added. “It's a remarkable state of play. People moving quietly, not wanting attention. At some point, firms will be more open and I think many will be surprised.”
Horsely said that over the past week, he has had ten meetings with RIAs and family offices. “Every single one ran long,” he said, with one running over by two hours.
“I can't tell you how exciting the state of the dialogue is,” he said. “Many of these firms have incredible people, who fully get it, are long-term oriented, and are thinking about how it can fit in. All are extremely busy, but choosing to make the time to dig in. We've entered a new chapter.”
And while many think that crypto is only appealing to the younger crowd, Horsely said that hasn’t been his experience.
“A common question I get asked is, ‘I imagine most of your clients are younger?’” he said. “This is not the case. What is the case is that younger generations and experienced generations come to conviction for different reasons.”
“The advantage of younger generations: intuition,” Horsley said. “Younger people are often much more immersed in the digital world. They intuitively see value in fully digital things: Twitter followers are valuable, YouTube subscribers are, your camera roll is, streamed-only music and playlists, etc. Not to mention anyone who's played Fortnite, Roblox, WoW, CoD, etc. A digital asset having value is intuitive. This cohort often sees visions for what might be possible. They often think about if it’s something they want to use and what’s next.”
For the more experienced generations, he said their main advantage is that “they’ve seen this before.”
“They remember people dismissing the internet, dismissing Amazon, the electrification of markets, doubting ETFs, doubting the need for a PC in every home, dismissing the iPhone for not having a keyboard,” he said. “They remember being non-consensus right a few times, and consensus wrong a few times before. They've lived through the technology adoption cycle multiple times and have more context for interpreting something new. This cohort often sees patterns and has incredible clarity. They often think about what the impact will be, and how to position for it.”
“Both can arrive at conviction, but through different vectors, and often wanting to discuss different dimensions,” Horsley said. “Instead of age being the predictor, I would argue the more common variables are if a person has (a) an open mind and naturally entertains new ideas, and (b), maybe the most important and challenging for experienced generations: has the time to explore new ideas.”
For these reasons, Horsely reiterated that this bull market is just getting started, and people are underestimating how well Bitcoin will perform following the halving.
Evidence that more experienced Bitcoin traders feel the same was provided by on-chain analysis firm CryptoQuant, whose data shows that more than 27,700 BTC — worth $1.75 billion at current prices — was sent to accumulation addresses during a 24-hour period between April 16 and 17, a new one-day record for Bitcoin.
Accumulation addresses are Bitcoin addresses that show no previous withdrawals, hold a balance over 10 BTC, have been active at some point in the last seven years, and have been screened to exclude wallets known to be affiliated with Bitcoin miners and crypto exchanges.
The data indicates that there has been an elevated level of motivated buying around the $63,000 range, which suggests that large, dedicated investors maintain their confidence in accumulating and holding Bitcoin for the long term.
In response to the posts from Horsely, market analyst Fred Krueger posted the following tweet adding credence to the outlook that the bull market is just getting started.
