The air crackles with anticipation as the bitcoin network hurtles toward its fourth halving event, expected in the coming hours.
This pre-programmed phenomenon halves the block reward for miners (the number of new Bitcoins generated to verify transactions). While some see it as a recipe for another digital gold rush, experts warn against blind optimism.
bitcoin Rewards Shrink Drastically, Not Supply
Before the halving, misconceptions abound. Binance co-founder Changpeng Zhao recently clarified that the halving does not reflect a stock split, which increases the total number of shares.
In contrast, halving reduces the rate at which new Bitcoins enter circulation, effectively reducing supply. This scarcity is a fundamental principle behind the design of the cryptoasset, which aims to imitate precious metals such as gold.
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Someone asked me if the bitcoin halving is like a stock split… We're still early. (The answer is no)
Happy halving! pic.twitter.com/gxAvfOpGQH
– Czech Republic BNB (@cz_binance) twitter.com/cz_binance/status/1781180083425988959?ref_src=twsrc%5Etfw” rel=”nofollow noopener” target=”_blank”>April 19, 2024
Past performance is not a guarantee
History offers a tantalizing vision. The three previous halvings coincided with significant price increases. Following the 2012 halving, bitcoin witnessed a staggering 9,500% surge.
The 2016 halving was followed by a more modest, but impressive, jump of 3,000% the following year. However, analysts warn against blindly following historical trends. Market conditions and investor sentiment can significantly influence price movements.
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BTCUSD trading at $64.381. Chart: TradingView
bitcoin Halving: Analyst Predictions
Plan B, the anonymous analyst behind the popular Stock-to-Flow (S2F) model, is a firm believer in the bullish influence of the halving.
He maintains that the next event will follow the established pattern, which will drive prices higher.
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In my opinion, this bitcoin halving will be NO different:
– The entire bitcoin price rise will be halved again.
– Buying 6 million before the halving and selling 18 million after the halving (green line) will exceed buy&hold
– btc > $100k in 2024
– Maximum btc > $300k in 2025 pic.twitter.com/lCZjnuoYMO
— PlanB (@100 billion dollars) twitter.com/100trillionUSD/status/1780586891735101653?ref_src=twsrc%5Etfw” rel=”nofollow noopener” target=”_blank”>April 17, 2024
Ramani Ramachandran, CEO of Router Protocol, predicts significant institutional demand during this halving, potentially surpassing previous retail demand. The convergence of these two forces promises an intriguing spectacle to observe.
Others, like Kadan Stadelmann, CTO of Komodo Platform, take a more nuanced approach. While he acknowledges historical trends, Stadelmann emphasizes the growing involvement of institutional investors as a potential factor influencing future price rises.
Early signs of a price increase?
The market seems to be whispering its own predictions. In the 24 hours before the halving, the price of bitcoin has already risen almost 5%. This could be a knee-jerk reaction from investors anticipating future shortages or a sign of renewed confidence in the world's leading cryptocurrency.
Meanwhile, a recent tech/bitcoin-halving-price-chart-record-crypto-b2530047.html” target=”_blank” rel=”noopener nofollow”>survey of institutional investors and wealth managers revealed that 69% anticipate increased investment in bitcoin due to the halving, while only 2% predict a reduction in investment.
The bitcoin halving marks a significant event in the history of the cryptocurrency, and its long-term impact will be a topic of debate for months, if not years, to come.
Featured image from Pexels, chart from TradingView
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