In less than 12 hours from now, the Bitcoin Halving will take place- a pivotal event in the crypto ecosystem that has the potential to disrupt markets and decide the fate of several cryptocurrencies and assets.
The Halving 2024 event will not only impact the price of Bitcoin- the most important cryptocurrency- but also several other digital currencies and assets including Ethereum, Litecoin, Altcoins and Memecoins.
Past antecedents of halving have proved that the value of Bitcoin has always surged exponentially, post the event. However, the volatile nature of cryptocurrencies, market instabilities and a potential global unrest situation could very well puncture the bullish balloons of investors.
What is Bitcoin halving?
Cryptocurrency transactions are usually recorded in a global ledger known as the blockchain, the process takes place after the miners create the blocks by solving a cryptographic puzzle using specialized hardware and – this is the key bit – receive a reward in newly created bitcoins. For those new to the concept of Bitcoins, it is only through miners that new BTC could be generated.
The algorithm programmed into the Blockchain network has put a cap on the number of BTC that can ever be generated which is 21 million. The Bitcoin halving takes place after 210,000 blocks are mined almost every 4 years, during this event the reward that miners receive for adding new blocks of transactions to the Bitcoin blockchain is cut in half. The idea behind the algorithm is to control the demand and supply ratio of BTC and hence preserve the “scarce” nature of Bitcoins.
How will the BTC price evolve after the halving takes place?
After the supply of Bitcoins is reduced, the price of Bitcoin should increase, following an economic rule that states that if the demand for an asset stays stable, while its supply decreases, the asset price should increase.
During the previous 3 halvings in 2012, 2016, and 2020, the bitcoin price increased an average value of 16% over the next 60 days after the halving took place
Mixed Sentiments from the Market
Although past Bitcoin halving events have always led to a steep surge in the price of BTC, the overall market sentiments on the upcoming halving is mixed. While several crypto enthusiasts are banking upon bullish sentiments, firms like JP Morgan and Goldman Sachs have claimed that cryptocurrencies’ price might not shoot up post the halving event..
Goldman added that different macroeconomic factors play an important role in the increase of bitcoin, adding that different events like the adoption of spot ETFs and the recent rally in BTC prices, fueled by inflows into the U.S.-based spot ETFs, could show that a significant portion of post-halving expectations may have already take place
Pavel Zavadskii, founder of Biqutex stated, “At the moment, the crypto market is clearly in a bullish phase since in early March Bitcoin reached ATH (All-Time High) after the approval and listing of Bitcoin spot ETFs on the US stock market.
However, now the growth is already running out of steam and I don’t expect any serious movements like overcoming the $100,000 mark shortly. Carefully assess your risks when deciding to invest in BTC at current price levels, since the expected event – halving – is already included in the price, so you should not hope for a price pump immediately after the block reward is halved.”
Similarly, Jyotsana Hirdyani, South Asia Head at Bitget, opines, “Bitcoin’s price may experience short-term corrections or dips following a halving, but historical precedent suggests that the halving could catalyze significant shifts in the crypto market leading to a new all-time high in the upcoming months.”
she adds, “Observing previous cycles, we may witness a notable decline in BTC dominance accompanied by a surge in interest and investment in altcoins within 12- 18 months of the halving. Further, the recent approval of Bitcoin and Ether ETFs by the Hong Kong regulator underscores growing institutional acceptance and marks a pivotal moment for Bitcoin adoption. This development, coupled with the Bitcoin halving event hints at a positive trajectory for Bitcoin’s future.”
War as a hurdle in Bitcoin’s stride and Elon’s two cents for peace
War drums are beating in the Middle East as recent events of military engagement between Iran and Israel and a simultaneous war between Israel and Hamas in Gaza of Palestine have shown.
Recently, Iran fired hundreds of drones, ballistic missiles and cruise missiles into Israel in a retaliatory step against the latter, which had bombed the Iranian embassy in Syria and killed several top military officers of Iran. A day ago, Israel retaliated by firing missiles and drones into Iran’s territory.
The current conflict between Israel and Iran could negatively impact the price of Bitcoin, at the moment of writing the article BTC broke below $60,000 following the report of an Israeli missile strike on Iran. Bitcoin slid more than 5.5% to $59,961.
Perhaps taking a cue from the repercussions of the global unrest, tech mogul Elon Musk took to X (formerly known as twitter)on Friday and posted a picture of a rocket launch belonging to his ‘SpaceX’ venture. He wrote the caption, “we should send rockets not at each other, but rather to the stars (sic).”
Also Read : War and Crypto: Will Iran-Israel crisis swim or sink Crypto ahead of Halving?
Conclusion
We can conclude that following a basic economic rule on demand and offer of an asset the price of bitcoin should technically increase after the halving takes place, but also there are different macroeconomic factors and global events taking place that could impact the prices. Nevertheless, Halving is an event that has already set the crypto charts in motion and it will be interesting to see which way the river will flow.
