Bitcoin halving could be 'buy the rumor, sell the news' event, crypto payments company CEO says

The bitcoin halving could be a "buy the rumor, sell the news" event, according to the CEO of a crypto payments solution provider.

"With more sophisticated market participants and institutional investors in this market cycle, we may see a case of ‘buy the rumor, sell the news’ for this halving," Coinify CEO Rikke Staer said in an email sent to The Block.

Staer added that because the halving cuts miner rewards in half, less efficient mining operations might become unprofitable. "These miners might be forced to sell existing bitcoin holdings to cover electricity costs, equipment maintenance, and other operational expenses," she added.

According to the Coinify CEO, the sudden influx of bitcoin from miners selling to stay afloat could overwhelm existing buy orders and drive down the price. "This can create a negative feedback loop, where lower prices force more miners to sell, further depressing the price," she said.

Bitcoin halving price reaction will not be immediate

Staer added that bitcoin's price reaction to the upcoming halving could take several months, and replicating the dramatic percentage gains observed in the past may be challenging.

"Price reaction is typically not immediate, historically speaking, major post halving growth occurs 6-18 months and larger price movements become statistically less likely with increasing market size," she said.

Staer added that the dramatic percentage gains observed in prior halvings might be difficult to replicate simply due to the current bitcoin market's sheer size.

Bitcoin joins equities in market rebound

Bitcoin has rebounded alongside risk assets after the macroeconomic landscape was hit by uncertainty on Tuesday after U.S. Federal Reserve Chair Jerome Powell voiced his support for continuing the central bank's restrictive monetary policies.

The bitcoin price posted a muted 0.7% increase in the past 24 hours and was changing hands for $62,829 at 9:48 a.m. ET., according to The Block's Price Pages. 

The bitcoin price has gained in the past 24 hours. Image: The Block.

On Tuesday, Fed Chair Powell told a forum in Washington that recent data has not boosted the central bank's confidence that it is nearing its 2% inflation goal. The CME's FedWatch tool forecasts a 98.4% likelihood that rates will remain steady in May. It has also trimmed its prediction for a rate cut at June's Federal Open Market Committee (FOMC) meeting to 16.4%, while 83% of interest rate traders are betting that rates will remain unchanged.