Bitcoin and ether closed Thursday with losses, but ether has seen a surge of over 100% since mid-June. The Bitcoin halving, once celebrated by only early cryptocurrency enthusiasts, has now been embraced by major institutions on Wall Street and piques the interest of retail investors every cycle. The halving event occurs approximately every four years, reducing the supply of bitcoin by half to create a scarcity effect akin to “digital gold.”
According to Antoni Trenchev, co-founder of crypto exchange Nexo, the upcoming halving in 2024 is anticipated to be particularly explosive due to reduced supply and increased demand from ETFs. This halving is unique because bitcoin has already surpassed the previous cycle’s high before the event, making it challenging to predict the duration and intensity of the current cycle.
After previous halvings in 2012, 2016, and 2020, the bitcoin price spiked roughly 93x, 30x, and 8x, respectively, from the halving day price to the cycle peak. However, some suggest that the significant impact of halving on the bitcoin price may be behind us. Despite this, Steven Lubka from Swan Bitcoin remains optimistic about returns after the halving this year.
The halving event cuts the incentives for bitcoin miners in half, as outlined in the Bitcoin blockchain code, occurring roughly every four years. Miners add new blocks of bitcoin transactions to the global ledger, receiving rewards of 6.25 bitcoins, which will be reduced to 3.125 bitcoins in the upcoming event.
As miners sell a significant portion of the bitcoin they mine to cover operational costs, the halving will reduce the amount of bitcoin available. This reduction in supply contributes to bitcoin’s value as a digital asset and could lead to increased prices in the months following the event. Despite diminishing returns from previous halvings, market experts believe this year’s cycle could see a reversal, fueled by new demand from bitcoin ETFs and increased whale demand in the market.
Overall, the impact of the halving on bitcoin prices may be less significant than before, with demand growth playing a crucial role in driving up prices post-halving.
Bitcoin and ether ended Thursday in the red, but ether has surged more than 100% since mid-June. The Bitcoin halving event, which takes place roughly every four years, is approaching and is expected to have a significant impact on the market. This event cuts the supply of Bitcoin in half, creating a scarcity effect and making it similar to “digital gold.” Historically, the halving has set the stage for new cycles and bull runs, with past halvings resulting in significant price increases for Bitcoin. However, some experts warn that the impact of the halving may be diminishing as the supply of Bitcoin gets smaller every four years.
Miners sell a lot of the Bitcoin they mine to cover their costs, so when the mining rewards are cut in half during the halving event, there is less Bitcoin being sold into the market. This can lead to increased scarcity and potentially higher prices for Bitcoin over time. The upcoming halving, scheduled to take place in the next week, is expected to lead to increased demand for Bitcoin, especially with the approval of Bitcoin ETFs earlier this year.
While Bitcoin has historically seen diminishing returns from halving to halving, this trend may reverse this year due to increased demand for Bitcoin. The impact of the halving on prices may be diminishing, as the total supply of Bitcoin available for sale is decreasing relative to the total amount of Bitcoin in circulation. However, demand for Bitcoin, driven by whale investors, new investors, and holders of Bitcoin ETFs, is at an all-time high, leading to a potential price increase after the upcoming halving event.
Overall, the Bitcoin halving event is expected to have a significant impact on the market, with potential price increases and increased demand for the cryptocurrency. Investors should be aware of the impact of the halving on Bitcoin prices and consider the potential returns of investing in Bitcoin before and after the event.
Source link
