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Bitcoin Halving: Goldman Sachs Minimizes Expectations Around ‘Buy the Rumor, Sell the News’ Effect

Goldman Sachs analysts feel that if the next Bitcoin halving is a “buy the rumour, sell the news” occurrence, it will have little impact on Bitcoin’s medium-term prospects.

Bitcoin Halving

The supply-demand dynamic and sustained demand for spot bitcoin exchange-traded funds (ETFs), along with the self-reflexive nature of crypto markets, will likely drive bitcoin price performance, they added.

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Goldman Sachs Analyzes Bitcoin Halving’s Price Influence

Global Investment Bank Goldman Sachs advises against using data from previous Bitcoin halving cycles to predict the cryptocurrency’s future price. Goldman Sachs’ FICC (Fixed Income, Currencies, and Commodities) and Equities teams argued in a letter to clients last week that macroeconomic factors, rather than the halving of mining rewards, have most likely spurred previous Bitcoin bull runs.

In the current cycle, sustained BTC gains may depend on significant 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 all-time highs differs significantly,” the analysts at Goldman Sachs explained.

Given the current macroeconomic conditions, it is prudent to exercise caution when projecting historical cycles and the impacts of halving. The investment banking giant also noted that today’s scenario, characterized by high inflation and interest rates, differs from the macroeconomic conditions during earlier halvings. Therefore, for historical patterns to recur, macroeconomic conditions must favor risk-taking, which is not the case right now.

Goldman Sachs describes Bitcoin halving as a “psychological reminder to investors of BTC’s capped supply.” The bank’s experts stated:

The question of whether BTC’s halving next week will be a ‘buy the rumor, sell the news’ event has a less significant impact on BTC’s medium-term prognosis.

“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,” according to the researchers.

Despite expectations of a short-term “sell the news” scenario following the Bitcoin halving, crypto industry executives such as Bitwise CIO Matt Hougan and Crypto.com CEO Kris Marszalek remain optimistic about Bitcoin’s long-term prospects.

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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