Bitcoin, the world’s foremost cryptocurrency, recently marked a significant event known as the “halving,” occurring approximately every four years, as reported by CoinGecko, a leading cryptocurrency data and analysis company.
Following the completion of the halving, Bitcoin experienced relative stability, with a marginal 0.47% decline, settling at $63,747.
Enthusiasts of Bitcoin eagerly anticipated this event, which represents a fundamental shift in the cryptocurrency’s underlying technology aimed at reducing the rate of new Bitcoin creation.
The concept of halving was ingrained in Bitcoin’s code from its inception by its pseudonymous creator, Satoshi Nakamoto, as a mechanism to control the issuance of new Bitcoins.
Chris Gannatti, global head of research at WisdomTree, a prominent asset management firm marketing Bitcoin exchange-traded funds, hailed the halving as “one of the biggest events in crypto this year.”
For some within the crypto community, the halving underscores Bitcoin’s value as an increasingly scarce asset, with Nakamoto capping the total Bitcoin supply at 21 million tokens. However, skeptics view it merely as a technical adjustment hyped by speculators to inflate Bitcoin’s price.
The halving works by reducing the rewards miners receive for creating new Bitcoins, thereby increasing the cost associated with introducing new coins into circulation.
This event comes on the heels of Bitcoin’s price surge to an all-time high of $73,803.25 in March, following a gradual recovery from the dramatic plunge witnessed in 2022. As of Thursday, the cryptocurrency was trading at $63,800.
The enthusiasm surrounding Bitcoin and other cryptocurrencies has been fueled by anticipation surrounding regulatory approvals, such as the U.S. Securities and Exchange Commission’s endorsement of spot Bitcoin exchange-traded funds, alongside expectations of central bank interest rate cuts.
Previous halvings occurred in 2012, 2016, and 2020, with some proponents pointing to subsequent price rallies as indicators of potential price increases post-halving. However, many analysts remain cautious.
JP Morgan analysts cautioned against expecting post-halving price surges, suggesting that such expectations have already been factored into Bitcoin’s price. They anticipate a decline in Bitcoin’s price post-halving due to being “overbought” and subdued venture capital funding for the crypto industry this year.
Despite the significance of halving events, financial regulators continue to caution against the risks associated with Bitcoin, emphasizing its speculative nature and limited real-world utility.
Andrew O’Neill, a crypto analyst at S&P Global, echoed sentiments of skepticism regarding extrapolating price predictions from past halvings, emphasizing the multifaceted factors influencing Bitcoin’s price trajectory.
Amidst geopolitical tensions and concerns over prolonged central bank rate hikes, Bitcoin’s direction has remained uncertain since reaching its record high in March, exemplifying the inherent volatility within cryptocurrency markets.
