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Goldman Sachs Suggests The Bitcoin Halving May Not Drive The BTC Price Higher This Time Because Of Different Macro Conditions

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Goldman Sachs said the Bitcoin halving might have a different impact on the BTC price this time.
Goldman Sachs said the Bitcoin halving might have a different impact on the BTC price this time.

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Investment banking giant Goldman Sachs has warned investors against using past Bitcoin halving cycles to predict the BTC price performance after the coming halving event.

The quadrennial Bitcoin halving will happen in less than two days, and many analysts and investors anticipate that BTC’s price will rally after that, as it has done after past halving cycles.

But Goldman says things might be different this time because of the prevailing macro conditions.

“Caution should be taken against extrapolating the past cycles and the impact of halving, given the respective prevailing macro conditions,” it said.

During the past halving cycles, demand for risk assets was high as interest rates remained at or below zero in most developed economies. But now US interest rates are at above 5%, with analysts growing more skeptical that rate cuts will happen this year.

With interest rates remaining high, it implied that demand for risk assets such as Bitcoin may be underwhelming compared with previous cycles.

Bitcoin Halving Is A Psychological Reminder Of Capped BTC Supply

Goldman noted that demand for Bitcoin grew after the approval of spot Bitcoin exchange-traded funds (ETFs) in the US in January, and said the Bitcoin price will likely continue to be driven more by the dynamics of supply and demand, and how much continued demand there is for BTC ETFs, than the halving itself.

Still, it added that Bitcoin halving is a “psychological reminder to investors of BTC’s capped supply.”

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