Goldman Sachs Urges Caution: Bitcoin’s Fourth Halving Not Necessarily Bullish Indicator

• Goldman Sachs is warning BTC investors that the highly anticipated Bitcoin halving could fail to deliver on expected returns.
• The bank reveals that previous bullish trends were not driven solely by the halving but also by other macro factors that played a role.

Financial banking giant Goldman Sachs is warning Bitcoin (BTC) investors that the upcoming Bitcoin halving could fail to deliver the desired returns. With just two days to the next Bitcoin halving, the Bitcoin community is hoping that history will repeat itself. Historically, in the months following the halving, BTC records remarkable rallies that end with new all-time highs.

Data shows that previous halvings have delivered returns of  93x, 30x, and 8x in the last 3 cycles. Notably, this return has been decreasing leading to concern that the upcoming cycle could offer less than 8x in returns.

However, experts argue that due to the increase in prices, and found price stability, returns have become moderate. On the other hand, adoption and demand for the digital asset have in recent months peaked, primarily driven by Bitcoin spot ETFs.

In a note to clients dated April 12th, Goldman’s Fixed Income, Currencies and Commodities (FICC) and Equities team warned:

Historically, the previous three halvings have been accompanied by BTC price appreciation after the halving, although the time it took to reach the all-time highs differs significantly. Caution should be taken against extrapolating the past cycles and the impact of halving, given the respective prevailing macro conditions,

The team further warns that the upcoming event could end up being a  “buy the rumor, sell the news event.” But continues to add that “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,”

One key macroeconomic factor is the high inflation and high-interest rate climate. In the past, U.S. investors’ risk appetite has been high, contrary to the current conditions. US interest rates, the highest globally, are likely to stay high in 2024. This is because inflation remains stubborn and the economy is strong, dashing hopes for interest rate cuts.

Bitcoin ETFs to Fuel BTC After the Bitcoin Halving

Taking trends into account, inflows into the recently launched ETFs could play a significant role in Bitcoin’s price trajectory after the halving. Prices have correlated to inflows since the launch leading to an all-time high of nearly $74,000.

According to Bloomberg data, 11 of the spot ETFs launched, have amassed $59.2 billion in assets under management, signifying unprecedented demand. If inflows remain high, this almost guarantees that prices will continue on an upward trajectory.

At the time of writing, BTC is trading at $62,700 after a 2% rebound following a temporary dip below $60,000.

A CryptoQuant analyst, Julio Moreno, believes Bitcoin’s price slump may be nearing an end. His analysis suggests that traders have sold off most of their profitable holdings, potentially reducing the downward pressure on Bitcoin’s price. As CNF reported, there is an anticipated supply shock after the Bitcoin halving with bulls expecting BTC to stage a massive rebound that ends with the cryptocurrency reaching $80,000.