In the past, bitcoin halvings have been seen as positive developments for the cryptocurrency; experts of the crypto market believe that the current halving, which is anticipated in April, may benefit from an even more favorable setup than in prior cycles.
The Bitcoin blockchain’s algorithm incorporates halving as a way to manage the coin’s supply, which is limited at 21 million. Miners will receive 50% fewer bitcoins for validating transactions during halvings, which slash the payout for mining bitcoin in half.
Up until the entire maximum quantity of bitcoin is revealed, halvings are planned to occur after every 210,000 blocks that are mined, or roughly every four years.
Historical evidence indicates that bitcoin usually sees price growth in the months following halvings. According to a forecast by bitcoin investing site Swan Bitcoin, the next halving is anticipated to take place on April 19.
However, according to Cosmo Jiang, portfolio manager at cryptocurrency asset manager Pantera Capital, this specific halving occurs at a unique moment in bitcoin’s history when the cryptocurrency faces a confluence of variables impacting both its supply and demand side.
According to Jiang on a call, bitcoin exchange-traded funds are bringing in “steady daily inflows” into the cryptocurrency from the demand side as supply is controlled by halvings. For the first time ever, ten bitcoin exchange-traded funds (ETFs) were approved in January by the U.S. Securities Exchange and Commission.
Shortly after the anticipated date of the halving, increased institutional participation propelled bitcoin to a level close to its all-time high. Bitcoin is currently less than 10% behind its all-time high of $68,990, which it set in November 2021, having increased more than 40% so far this year to over $62,600.
Martin Leinweber, a digital-asset product strategist at MarketVector Indexes, claims that this surge deviates from the historical pattern of bitcoin prior to its halving. According to Leinweber, historically, the two to three months preceding a halving have seen a rather muted performance for bitcoin.
According to Adam Swick, chief growth officer of bitcoin mining firm Marathon Digital Holdings Inc., the Bitcoin blockchain is safer now than it was during earlier halvings. Based on data from Blockchain.com, the total hash rate of Bitcoin, or the total processing power protecting the blockchain, reached a record high in February of about 600 million terahashes per second.
That allays some worries about the security of the Bitcoin network following the halving, since some miners might have to stop mining if the rewards are halved, according to Swick.
Even while bitcoin’s value usually benefits after halving, the cryptocurrency’s price is often very unpredictable when macroeconomic conditions are unclear. In the current context, that might be true since investors are concerned that the pace of disinflation may slow down and it’s not obvious when the Federal Reserve would begin reducing interest rates.
Before rising to new record highs, the price of bitcoin may experience “some corrections,” according to Michael Novogratz, CEO of cryptocurrency investment firm Galaxy Investment Partners, in a recent interview.
