Coinbase considers that the impact of the Bitcoin Halving event in 2024 on the market is unpredictable, especially when the asset is trading in a relatively small market.
The company made this point in a report published on Wednesday. They note that predicting Bitcoin’s upside is difficult due to the current liquidity of Bitcoin and the strength of the USD.
APPROVED ETFs WILL inject NEEDED Liquidity into the MARKET
Coinbase argues that, while there is an expectation that a future reduction in the supply of Bitcoin will have a positive effect on its price, previous Bitcoin Halving events have not shown a clear pattern.
The recent spike in liquidity does not provide enough information to predict an event that will take place in the spring of 2024.
After the Bitcoin Halving, the reward for miners in computing the hash of a block of transactions dropped to about 3 BTC. The Bitcoin Halving happens every four years and is a way to aid Bitcoin in deflation.
Earlier, insider information revealed that asset management firm BlackRock is planning to sign up for a Bitcoin Exchange-Traded Fund (ETF) Product. BlackRock reportedly intends to use Coinbase as a custody institution.
If approved, the new ETF product and potential retirement fund that owns Bitcoin could bring much-needed liquidity to the market by the time of the halving. The depth of the Bitcoin market has taken a hit after famed market maker Alameda Research struggled.
The US Securities and Exchange Commission (SEC) is confronting Grayscale Investments in court after denying the asset manager’s request to convert Grayscale Bitcoin Trust (GBTC) into an ETF.
If Grayscale wins, this could also ease the pressure on Bitcoin’s liquidity problem by allowing relevant shareholders to convert GBTC shares.
BITCOIN WILL BE BENEFITS OF THE SEC’s HARD ACCESS
Previously, the SEC had refused to register spot Bitcoin ETF products, citing that these products have the potential to manipulate the underlying market. However, the agency has already approved a number of Bitcoin futures products from ProShares and VanEck, among others.
The SEC sued Coinbase earlier this month for operating as an unregistered broker-dealer in the US. This lawsuit could affect BlackRock’s ability to approve the ETF filing.
Michael Saylor, a well-known Bitcoin investor, said that Bitcoin’s dominance in the cryptocurrency market will increase sharply and become a “winner” after the crackdown from the SEC. In a recent interview with Bloomberg, he said:
“Bitcoin and crypto economy dominance has increased from 40 to 48% this year alone, but I believe that as untrusted stablecoins and tokens are removed, long-term dominance will go up to 80%.”
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