Bitcoin Sentiment Ahead of Halving

The overall media sentiment about bitcoin is in the high end of its range. According to academic research on social media and daily asset prices, "Sentiment predicts positive next-day returns, but attention predicts negative next-day returns." https://lnkd.in/g8GgXdHX. We see a similar effect at monthly and longer horizons for many assets (stocks, currencies, etc...). News media attention to bitcoin lately has been very high.

The Bitcoin Halving is likely to occur in late April. From a psychological perspective, the increasing scarcity of bitcoin increases its attractiveness. Yet the last halving was May 11, 2020, and previously one occurred in July 2016. Before and after the past halvings, there was no clear price impact of the events.

I've noticed in recent conversations at finance events that the launch of ETFs (specifically the SEC approval) has legitimized Bitcoin in the eyes of conservative financial institutions and family offices. Many are discussing new bitcoin products and investments. Surprisingly to me, the tradfi adoption of bitcoin as a store of value seems to be in early stages.

So is Bitcoin peaking? What does the halving mean? It's hard to know in the short term: sentiment is higher (and vulnerable to a fall). The high overall attention implies downward pressure in future months. Longer term (years) the momentum is still positive.