Bitcoin Halving Fails to Spark Surge Amid Geopolitical Woes and Market Headwinds

Bitcoin's recent halving event, which reduces the rate of new Bitcoin creation, has had minimal impact on its price. Industry experts attribute this to the dominant influence of broader financial markets and geopolitical events, such as current tensions in the Middle East. While there was initial speculation that the halving would lead to a surge in Bitcoin's value, it has remained relatively unchanged, indicating a greater dependence on external factors.

Bitcoin Halving Event Dampened by Geopolitical Turmoil and Market Sentiment

London, April 25, 2023 (Reuters) - Bitcoin's highly anticipated halving event, a fundamental change to the cryptocurrency's creation rate, has had minimal impact on its price, with market observers attributing this to broader financial market conditions and geopolitical developments.

Enthusiasts had eagerly anticipated the "halving," which occurred on Saturday at approximately 0014 GMT. This technological adjustment reduces the number of new bitcoins created by half every four years, and past halvings have been associated with substantial price increases.

However, by Monday afternoon GMT, bitcoin's price had remained relatively stable at $66,300, showing no discernible impact from the halving. While it had gained 1.2% the previous week and 3.4% on Monday, it has struggled to sustain momentum since reaching an all-time high of $73,794 in March.

Industry experts have pointed to the current geopolitical landscape as a more influential factor on bitcoin's trajectory than the halving event. "The geopolitical events unfolding at the minute are having a larger impact than any impact from the halving," said Mick Roche, senior trader at Zodia Markets, Standard Chartered's crypto arm. "So that'd be the perceived easing of tensions between Iran and Israel."

Global stock markets have partially recovered from recent losses on Monday as investors unwind defensive positions taken amid fears of a wider conflict in the Middle East.

Eric Demuth, CEO of Austrian cryptocurrency broker Bitpanda, emphasized bitcoin's growing dependence on broader market sentiment. "Crypto is so similar to stocks already. The same people that are trading stocks and tech stocks are also into crypto," he said.

Last year, the prospect of regulatory approval for spot bitcoin exchange-traded funds (ETFs) in the United States provided a significant boost to bitcoin's recovery from a series of price crashes in 2022.

"For bitcoin, the focus is now on 'institutionalization'," said Ben Laidler, global markets strategist at eToro. While retail investors currently dominate the bitcoin market, Laidler believes future regulatory changes could facilitate ownership by companies, banks, and central banks.

Despite its growth, the cryptocurrency sector remains a niche asset class, with a combined market value of approximately $2.5 trillion, according to data from CoinGecko. Financial regulators continue to caution investors about their speculative nature, limited real-world applications, and inherent risks.

The crypto markets eagerly await the U.S. Securities and Exchange Commission's decision on spot ETFs for ether, the second-largest cryptocurrency. However, Demuth and Roche suggest that hopes of approval in May are waning.