Buy some bitcoin ahead of the halving, says Jefferies' head of equity strategy in new note

Quick Take

  • In the latest edition of Jefferies’ Greed and Fear, Jefferies global head of equity strategy Chris Wood suggested investors should buy bitcoin ahead of the halving 
  • He wrote that the halving “should increase upward price pressure assuming demand for Bitcoin continues to grow, as was the case after the previous halving in 2012 and 2015.”

Bitcoin's upcoming halving appears to be capturing the attention of some Wall Street analysts.

In an April 30 note, Jefferies' global head of equity strategy Chris Wood suggested that investors buy bitcoin ahead of the halving, the network event that will see the per-block reward subsidy fall from 12.5 BTC to 6.25 BTC. 

Wood – who authors the firm's famous weekly "Greed and Fear" memo – wrote that the halving "should increase upward price pressure assuming demand for Bitcoin continues to grow, as was the case after the previous halving in 2012 and 2015."

The question of whether the halving will result in a surge in bitcoin's price has been the subject of fierce debate for much of the year, with some arguing that the supply cut is priced in. According to current estimates, the halving is expected to take place on May 12.

Bitcoin's price has seen significant action since a sharp fall in mid-March, with the cryptocurrency appreciating ~33% since the day the S&P500 bottomed on March 23, according to data from The Block Research. 

"Now it is true that bitcoin price was hit in the March risk-off, declining by 57% from US$9,184 to US$3,915 in the week to 13 March (see Exhibit 11)," Wood noted of the sell-off. "Still this does not necessarily mean to GREED & fear that Bitcoin is just another high beta asset."

Wood went on to write:

"In this respect, GREED & fear continues to believe that investors should own both gold and Bitcoin in the sense that they are not mutually exclusive, though clearly attitudes to both vary according to the demographic profile of the investor."

Furthermore, Wood contended that bitcoin could add a degree of diversity to an investment portfolio.

"It also should be a source of diversification in a portfolio, as is gold, precisely because of its truly decentralised nature," he said. "It is this feature, combined with the fixed supply, which makes it a hedge against central bank manipulated fiat money."

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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