Halving Sparks Institutional Strategy Shifts, Bybit Experts Weigh In

After the latest Bitcoin halving, institutions are more focused on making improvements in their trading systems and custody solutions rather than changing their trading strategies.

During a recent AMA session hosted by Bybit, industry experts shared their thoughts about the unique aspects of the 2024 Bitcoin halving and its broader implications on the crypto landscape. Notably, after this latest halving, there was a shift in institutional focus towards improving trading systems and custody solutions, rather than changing trading strategies directly.

The approval of spot Bitcoin ETFs has also made its impact by facilitating smoother transactions between traditional and crypto markets, while also boosting the overall market sentiment. There has also been a shift in focus towards regulatory compliance and robust operational controls in response to increased scrutiny by regulators like the SEC.

Understanding the Bitcoin Halving

During the first few months of the year, Bitcoin’s fourth halving was a focal point for investors and analysts. It started many conflicting conversations about what the 2024 halving’s impact will be on BTC’s price and the market as a whole. However, there is one point that most people in the crypto community seemed to agree on: this halving was very different from all the ones that came before it.

In fact, since the last Bitcoin halving in 2020, Bitcoin has been accepted as legal tender in countries like El Savador, the number of Bitcoin users has passed a hundred million and a number of innovative Bitcoin investment products have hit the market like, for example, spot Bitcoin ETFs.

The Bitcoin Halving is an event that happens around every four years, where the reward for mining new blocks on the Bitcoin blockchain is halved. This process is designed to slow the rate of new Bitcoin creation to counteract inflation and maintain scarcity. The halving reduces the miner's reward, impacting both the profitability for miners and the overall supply dynamics of Bitcoin.

The previous halvings took place in November 2012, July 2016, May 2020, and most recently in April of 2024, with the reward decreasing from the original 50 bitcoins to 3.125 bitcoins. The intention behind the halving is not only to control inflation but also to encourage a higher market price due to reduced supply.

Although Bitcoin was initially created as a payment method, it became very popular as an investment vehicle, often treated as a speculative opportunity due to its potential for big price movements after halvings.

Institutional Perspectives on the Halving

During a recent AMA session hosted by Bybit, some industry experts like Ben Zhao, the co-founder and CEO of Bybit, Jerry Li, Product Manager of Bybit, Le Shi, Head of Trading of Auros, and Henri Arslanian, co-founder and Managing Partner of Nine Blocks Capital Management, discussed how the latest Bitcoin halving was different from the previous ones and what its implications are on the crypto landscape.

The Bitcoin halving event has already had some major implications from an institutional perspective, influencing both strategy and infrastructure. During bybit’s AMA, Zhao stated that institutions are prioritizing making improvements in their trading systems and custody solutions rather than changing their trading strategies. He believes this is a way for institutions to better manage the complexities of crypto transactions after the halving.

One of the factors impacting institutional strategies the most and that also makes the latest halving different from its predecessors is the approval of spot Bitcoin ETFs. These ETFs serve as gateways between traditional and crypto financial systems. According to Zhao, this not only makes transactions smoother for institutions but it also enhances the overall sentiment and stability of the Bitcoin ecosystem.

Regulatory and Risk Considerations

Arslanian from Nine Blocks Capital Management pointed out that this time, the halving itself has become less important for investors and institutions. Instead, the focus on the industry has shifted more towards regulatory considerations and implementing robust operational controls to sustain investment in a volatile market. This is logical considering the United States Securities and Exchange Commission (SEC) has been on a rather intimidating enforcement spree recently.

Shi from Auros also highlighted that regulatory uncertainties are creating entry barriers for both institutional and retail investors into the crypto market. However, he did acknowledge that these barriers are gradually being dealt with, which will make the crypto space much more accessible.

Overall, every Bitcoin halving brings its own set of challenges and opportunities. In this case, it seems like most experts agree that there is one clear underlying trend after the latest Bitcoin halving: cryptocurrency infrastructure and technology is improving.