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The Bitcoin halving has historically been seen as a bullish event for cryptocurrencies, with the upcoming halving (expected in April) potentially benefiting from a more favorable setup than previous cycles.
Halving is a mechanism written into the Bitcoin blockchain algorithm to control the supply of Bitcoin, with a cap of 21 million coins. During halving, the reward for Bitcoin mining is halved, meaning miners receive 50% fewer Bitcoins for validating transactions.
Halving occurs approximately every 210,000 blocks mined, or roughly every four years, until the maximum supply of Bitcoin is reached.
Historical data shows that Bitcoin (BTCUSD) often experiences price increases in the months following a halving. According to predictions from Bitcoin investment platform Swan Bitcoin, the next halving is expected to occur on April 19.
However, Cosmo Jiang, portfolio manager at cryptocurrency asset management firm Pantera Capital, suggests that this particular halving is the first of its kind in Bitcoin's history, with various factors affecting its supply and demand dynamics.
Jiang mentioned in a conference call that due to halving controlling the supply of Bitcoin, Bitcoin exchange-traded funds (ETFs) are bringing "stable daily inflows of capital" from the demand side for cryptocurrencies. In January, the U.S. Securities and Exchange Commission approved the first 10 Bitcoin ETFs in history.
Recently, increased institutional participation has pushed Bitcoin to levels close to historical highs, with less than 50 days remaining until the expected halving date. Bitcoin has risen over 40% so far this year to around $62,600, less than 10% away from the historical high of $68,990 reached in November 2021.
Martin Leinweber, digital asset product strategist at MarketVector Indexes, stated that this rise is different from historical patterns before Bitcoin halvings. Leinweber pointed out that historically, Bitcoin has shown relatively flat performance in the two to three months before halving.
Meanwhile, Adam Swick, Chief Growth Officer of Bitcoin mining company Marathon Digital Holdings Inc., stated that the Bitcoin blockchain is now more secure than during previous halving periods. The total hash rate of MARA Bitcoin, or the total computing power securing the blockchain, reached a historical high of approximately 6 billion terahashes per second in February, according to Blockchain.com data.
Swick noted that this helps alleviate some concerns about the security of the Bitcoin blockchain after halving, as some miners may be forced offline when their rewards are halved.
While halving typically benefits the value of Bitcoin, cryptocurrency prices often experience high volatility in uncertain macroeconomic conditions. This may apply to the current environment, as some investors are concerned about the progress of inflation stalling, and it remains unclear when the Federal Reserve will begin tapering.
Michael Novogratz, CEO of cryptocurrency investment firm Galaxy Investment Partners, recently told Bloomberg TV that there may be "some adjustments" in the price of Bitcoin before rebounding to new record highs. |
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Post time 11-3-2024 07:16:32