With the Bitcoin halving scheduled for April 19, crypto investors are on edge, expecting the event to serve as a catalyst for digital currencies and other assets. Occurring approximately every four years, analysts predict that the halving, coupled with a decreasing supply trend, will propel the value of the currency upward.
Contrary to popular belief, Fernando Pereira, an analyst at Bitget, cautions that the halving often triggers significant profit-taking among investors. Pereira notes that investors typically sell their positions around this time, resulting in a price drop of over 35%. He also highlights the additional market volatility stemming from the conflicts between Israel and Palestine, which could further drive down Bitcoin‘s price, potentially dipping below $60,000 in the near future, with altcoins likely experiencing even steeper declines.
Despite the anticipation of a correction, Taiamã Demaman, research leader at Coinext, remains optimistic about Bitcoin’s growth prospects. Demaman acknowledges the pressure from miners and a period of stagnation but sees potential for growth, especially considering past halving events.
So, how does the halving impact Bitcoin’s supply? The halving reduces the reward for mining the cryptocurrency by half every 210,000 blocks, a mechanism ingrained in Bitcoin’s design by its creator, Satoshi Nakamoto. The last halving occurred on May 11, 2020, with historical data indicating significant price increases following previous halving events.
Mercado Bitcoin’s report underscores the pivotal role of halving events in fueling bullish phases for Bitcoin. After the first halving in 2012, the price surged from around $12 to over $1,100 in 2013. Similarly, the second halving in 2016 saw a price jump from approximately $650 to nearly $20,000 by the end of 2017. The third halving in 2020 witnessed Bitcoin’s price soaring from around $8,500 to a historic high of nearly $64,000 in April 2021.
The reduction in mining rewards aims to maintain the currency’s integrity, with transaction validation remuneration adjusted accordingly. However, the mining process, reliant on powerful computers and energy-intensive operations, necessitates continuous motivation for miners. Consequently, miners may deactivate unprofitable equipment post-halving, leading to temporary drops in Bitcoin’s value as they liquidate assets to reinvest in newer hardware.
Demaman suggests that while short-term fluctuations may occur due to reduced mining activity, the market tends to stabilize within approximately 53 days post-halving, alleviating selling pressure from miners. Over the following year, Bitcoin’s price typically sees a significant increase, potentially surpassing $100,000 per unit, according to Demaman’s analysis.
