Bitcoin’s much-anticipated halving has been completed, a highly anticipated event that occurs every four years.
The purpose of this event is to halve the reward for miners, which is the amount of cryptocurrency released by the network to compensate companies that use powerful computers and complex mathematical calculations to create new blocks, the building blocks of the blockchain.
Essentially, the blockchain is designed in such a way that a halving occurs every time 210,000 blocks are added to the chain, approximately every four years.
At the time of halving, the amount of Bitcoin available as a reward for miners is halved, making mining less profitable and slowing down the production of new Bitcoin.
With the completion of the Bitcoin halving in 2024, miners can now only create 3,125 Bitcoin every 10 minutes.
Supporters of the leading cryptocurrency see this halving as a positive catalyst for the bullish market, further reducing the supply of new tokens at a time when demand has increased due to the launch of exchange-traded funds holding the digital asset directly.
It is worth noting that this year’s halving comes after Bitcoin reached its all-time high of $73,803.25 in March.
Prior to the event, the cryptocurrency was volatile, and this week it has dropped by around 4% to settle at $64,100.
With the Bitcoin halving of 2024 completed, analysts and crypto investors are speculating on how the trading of the leading digital currency might change.
The fundamental reasoning is that the increased scarcity of Bitcoin resulting from the halving gives it value.
If the supply of a commodity is reduced, under the same conditions, the price should increase as people try to buy more of it.
Bitcoin is no exception.
Some analysts, however, challenge this logic, emphasizing that any impact would have already been priced in.
Mechanically, the halving itself should not influence the price of Bitcoin in the short term, but many investors expect significant gains in the coming months based on the cryptocurrency’s performance after previous halvings.
Historically, the price of Bitcoin has increased significantly after halving events.
Following the halvings in 2012, 2016, and 2020, the price of Bitcoin increased by about 93x, 30x, and 8x, respectively, from the halving day price to the cycle peak.
Overall, while the halving event has an impact on the mining companies, the actual price of the cryptocurrency may not be immediately affected.
The update to the blockchain is expected to sweep away billions of dollars in annual revenues for miners, but this effect may be mitigated if the cryptocurrency price continues to rise.
As mining Bitcoin is an energy-intensive process, large-scale miners have invested billions of dollars in acquiring energy, purchasing mining equipment, and building data centers.
The sector is expected to consolidate, with publicly traded companies gaining market share, according to JPMorgan.
Regarding the future price of Bitcoin post halving 2024, opinions vary among experts.
Some predict a short-term decline in price due to overbought conditions and prices still being above comparative levels with gold adjusted for volatility.
However, the overall sentiment remains optimistic about a potential rally in the future, driven by sustained institutional interest and market dynamics.
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