Digital Asset Markets: A Macro-Driven Path Following Bitcoin Halving
Crypto markets will be influenced by macroeconomic factors in the short term, according to a recent report by Coinbase.
Past halvings have been accompanied by various catalysts within the cryptocurrency ecosystem that have acted as positive influences.
Coinbase’s report suggests that the rise of investors using BTC as a macro hedge has contributed to reducing volatility during this halving cycle.
Despite strong fundamentals in the crypto market, the direction of digital asset markets following the bitcoin (BTC) halving is likely to be influenced by macroeconomic factors, says Coinbase (COIN) in a research report released on Thursday.
Analyst David Han wrote, ”These factors are largely external to crypto and include geopolitical tensions, sustained high interest rates, inflation, and increasing national debts.”
The recent notable correlation of altcoins to bitcoin further supports this idea, indicating the dominant role of BTC in the market as both a crypto asset and a macro asset.
Coinbase’s report highlights that while previous halvings have often sparked a bull market, they have also been accompanied by additional catalysts within the ecosystem that have provided further positive momentum.
The highly anticipated halving event, which reduces the rate of growth in bitcoin supply by 50%, is expected to occur late tonight or early tomorrow UTC.
While crypto has typically been considered a ”risk-on” asset class, Coinbase notes that the resilience of bitcoin and the approval of spot exchange-traded funds (ETFs) have resulted in a division among investors. Some see bitcoin as a speculative asset, while others view it as a digital version of gold and a hedge against geopolitical risk.
The growth of investors using bitcoin as a macro hedge has contributed to the relatively smaller pullbacks in this halving cycle, the report adds.
Last week, Wall Street giant Goldman Sachs (GS) also expressed skepticism regarding the impact of the halving in the current macroeconomic climate. In a report, the bank cautioned against drawing conclusions from past cycles and instead emphasized the importance of considering the current macro conditions.