KEY POINTS
- Hayes said Bitcoin and crypto prices in general will fall around the halving event
- He did agree that BTC prices will likely be positive in the medium term, not 'directly' before or after the halving
- Historically, Bitcoin prices climbed in previous halvings, but things could be different this time
The former CEO of cryptocurrency exchange BitMEX isn't as optimistic as other analysts and enthusiasts around Bitcoin regarding the digital asset's price "around the halving," an event that cuts BTC mining rewards in half and only takes place every four years.
Arthur Hayes predicted in a Tuesday blog post that Bitcoin won't pick up directly before and after the halving, wherein the 50% cut in Bitcoin mining rewards results in a smaller supply of new BTC in circulation. He noted that while he agrees the expected April 20 halving will pump prices up in the medium term, the digital coin's price "could be negative" in the short term.
"The narrative of the halving being positive for crypto prices is well entrenched. When most market participants agree on a certain outcome, the opposite usually occurs. That is why I believe Bitcoin and crypto prices in general will slump around the halving," he pointed out.
Hayes added that investors should note how the halving will take place at a time when dollar liquidity is "tighter than usual." This will "add propellant to a raging firesale of crypto assets," he said.
Hayes went on to reveal that the said market trend added weight to his decision not to trade until May. He predicted that the bull market will only "begin in earnest" by May, which is why he will be "in a no-trade zone" until the first day of next month.
Hayes' prediction is somehow different from those of other Bitcoin enthusiasts and maximalists, who believe the halving will only drive BTC prices higher, possibly to new all-time highs. Historically, Bitcoin prices did climb after halving events.
However, blockchain analysis firm Chainalysis noted that unlike the previous halvings wherein BTC prices usually spiked within a year "after the halving" followed by a price adjustment period, Bitcoin already hit a new all-time high last month at $73,000, making the upcoming halving possibly unique from the earlier ones.
Bitcoin Foundation chair Brock Pierce previously told International Business Times that he believes the world's largest cryptocurrency by market cap could possibly reach new highs "before the halving" before prices slump again after the event, then pick up pace to potentially make another all-time high bull run "into the fall and winter."
Meanwhile, Bitcoin climbed over the weekend to $72,000, nearing its March all-time high. However, it has since stepped back to $69,000, proving how volatile the crypto market is.
