Bitcoin (BTC-USD) is slowly recovering after experiencing recent declines from its all-time highs. Benchmark Managing Director and Senior Research Analyst of Fintech and Digital Assets Mark Palmer joins Yahoo Finance Live to discuss the cryptocurrency's pricing patterns ahead of April's expected bitcoin halving event.

Palmer highlights that historical trends suggest the occurrence of a bitcoin halving "is not unusual." He points out that in 2016 and 2020, "significant retracements in price" preceding the bitcoin halving, and the same pattern is unfolding "in the 2024 cycle." Palmer draws an analogy between a bitcoin halving and "a wildfire," explaining that when the rewards paid to miners are halved, it prompts many miners to exit the market, leading to increased volatility.

However, Palmer notes that historically, an extended rally tends to follow after a bitcoin halving event. He also notes "demand shocks" stemming from the approval of spot bitcoin ETFs and the spillover into stocks crypto stock associated with the space's volatility, such as MicroStrategy (MSTR).

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Angel Smith

Video Transcript

SEANA SMITH: All right, Bitcoin rebounding on the back of the Fed decision this week. Now trading back above $67,000. Now, the cryptocurrency has certainly been on a wild ride, to say the least, since the approval of spot Bitcoin ETFs earlier this year. And it's also taken many of the crypto-related stocks along for the ride.

But as Bitcoin halving comes into view, could the crypto landscape be set for a new state of mind? We want to bring in Mark Palmer. He is Benchmark senior research analyst.

Mark, it's great to have you here. So we certainly have seen the seesaw action play out over the last several weeks. Not necessarily anything new when we're talking about the price of Bitcoin, but as we look ahead to the halving, what do you think the pricing activity is going to look like?

MARK PALMER: Yes. Well, thanks for having me. Good to talk to you What we are seeing right now is not unusual if you take a step back and look at the history of the halving as an event.

What we saw in two previous halvings, which occurred in 2016 and 2020, is that there were significant retracements in price ahead of that event. In 2016, it was close to 40%. In 2020, it was more around 20%, which is essentially what we've seen in the 2024 cycle.

You know, what's going on here, I think it's a couple of things. One is the uncertainty ahead of the halving when for those who don't know that the Bitcoin halving is when the rewards that are paid to miners for each block that they mine are cut in half. So the profitability of the miners is cut in half and hence a lot of miners tend to leave the market.