Bitcoin Liquidity Makes Halving Hard to Predict: Coinbase

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Coinbase suggested that the effect of the 2024 Bitcoin (BTC) halving on the market is unpredictable, with the assets trading in a relatively shallow market.

The company said in a Wednesday report that a consistent bullish narrative is complicated by Bitcoin’s current liquidity and the strength of the US Dollar.

ETF approvals could inject needed cash

He said that while markets expect the promise of a future shortage to have a positive impact on the Bitcoin price, previous cuts in the asset issuance rate offer no obvious pattern.

A recent spike in liquidity doesn’t tell much about an event that’s only expected to happen in the spring of 2024.

After the halving, miner rewards for solving a transaction block hash drop to around 3 BTC. The halvings occur approximately once every four years and contribute to Bitcoin’s merit as a deflationary asset.

Inside sources revealed earlier today that asset manager BlackRock intends to apply for a bitcoin exchange-traded fund (ETF). The company reportedly intends to use Coinbase as an institutional custodian.

If approved, the new ETF and potential Bitcoin allocations to pension funds could inject much-needed liquidity into markets at the right time for the halving. Bitcoin market depth suffered after the collapse of well-known market maker Alameda Research.

The United States Securities and Exchange Commission is currently fighting Grayscale Investments in court after rejecting the asset manager’s request to convert its Grayscale Bitcoin Trust (GBTC) into an ETF.

A Grayscale win could also partially mitigate the illiquidity of Bitcoins by allowing affected shareholders to redeem GBTC shares.

Reduction of GBTC shares compared to the net asset value | Source: YCharts

Redemptions will also allow Trust Units to regain parity with spot Bitcoin prices.

Bitcoin will benefit from the SEC’s hardline approach

The SEC previously denied previous applications for spot Bitcoin ETFs, citing potential manipulation of the underlying market. He has endorsed several Bitcoin futures products from ProShares and VanEck, among others.

The agency sued Coinbase earlier this month for acting as an unregistered broker in the United States. This lawsuit could be a potential mitigating factor in BlackRock’s ETF application.

Bitcoin bull Michael Saylor said Bitcoin’s dominance over the crypto will skyrocket and emerge victorious from the SEC crackdown. Speaking in a recent Bloomberg interview, the president of MicroStrategy said:

The dominance of Bitcoin and the crypto economy has increased from 40% to 48% this year alone, but I believe that as stablecoins and tokens disappear, that long-term dominance is heading towards 80%.

For the latest Bitcoin (BTC) analysis from BeInCryptos, click here.

Disclaimer

In accordance with the guidelines of the Trust Project, BeInCrypto is committed to providing impartial and transparent reports. This news article aims to provide accurate and timely information. However, readers are urged to independently fact-check and seek professional advice before making any decisions based on this content.

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