Goldman Sachs Warns Bitcoin Investors – Don’t Read Into Past Halving-Cycles

cryptonews.com:

In a note to clients, Goldman Sachs, one the world’s largest investment bank, advised against extrapolating data from previous Bitcoin halving cycles due to macroeconomic changes.

Every four years, the “halving” event occurs, in which the per-block Bitcoin (BTC) emissions are cut in half. The next halving is in 2 days, and it will see rewards cut to 3.125 BTC from 6.25 BTC, essentially halving the rate of new supply.

This creates artificial scarcity, which increases demand, and has historically preceded massive multi-month BTC rallies – something the cryptocurrency community believes will be repeated.

This is something Goldman Sachs acknowledges, stating “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.”

However, this time they are skeptical, warning their clients that “Caution should be taken against extrapolating the past cycles and the impact of halving, given the respective prevailing macro conditions” in a note from the Currencies and Commodities (FICC) and Equities team on April 14th.

This doubt is seeded in the understanding that today’s economy is not the same as it has been in previous halvings. Macroeconomic factors such as high inflation and interest rates should be taken into account.

Last year, the M2 money supply of the major central banks at the time, including the People’s Bank of China, the European Central Bank, the Bank of Japan, and the U.S. Federal Reserve, rose quickly.

Consequently, interest rates in the developed world remained at or below zero, encouraging risk-taking across the financial market, including cryptocurrencies. Goldman believes that similar