Changpeng Zhao, CEO of Binance, one of the world’s largest bitcoin and cryptocurrency exchanges, has expressed his belief that the next bitcoin halving, scheduled for 2024, could usher in a period ofrenewed price growth.
bitcoin halvings, which occur approximately every four years, are pivotal events in the history of the cryptocurrency. During these events, the rate at which new bitcoin is created through mining is reduced, resulting in a reduction in the issuance of the asset.
As Zhao alluded to, this supply shock has historically had a significant impact on the price of bitcoin, resulting in all-time highs in 2013, 2017, and 2021.
Zhao’s comments about the potential for “all-time highs” following bitcoin‘s halving in 2024 are based on historical trends. Over the past three halvings, bitcoin has seen notable price increases in the following years.
Zhao offers the following explanation of the data:
- Pre-Halving Excitement: In the run-up to the bitcoin halving, the cryptocurrency community typically witnesses a surge in excitement, debates, and media coverage. This phenomenon reflects the anticipation and high expectations surrounding the event.
- The post-halving reality: Contrary to some expectations, the price of bitcoin does not immediately double overnight after a halving. In contrast, the immediate aftermath is typically characterized by a period of consolidation and adjustment.
- Subsequent price increases: It is in the year or years following the bitcoin halving that the price of the cryptocurrency has historically reached new all-time highs. This phenomenon is driven by a combination of factors, including increased awareness, increasing adoption, and the reduced rate of bitcoin production.
As such, the comments find Zhao echoing the belief of many Bitcoiners that the asset is becoming predictable and cyclical with its price movements, as a result of the fact that it is a sound money whose monetary policy is not controlled by the governments.
These events serve as a reminder of the deflationary characteristics of digital currency, which distinguish it from traditional fiat currencies.
