- In summary, Bitcoin has recently undergone its “halving,” a process aimed at decreasing the rate of new token issuance. This event led to a decrease in value to $99,340.
- Critics view the halving as a mere technical adjustment hyped by speculators to inflate the virtual currency’s value.
Bitcoin, the largest cryptocurrency globally, has completed its “halving,” occurring approximately every four years, as reported by CoinGecko, a cryptocurrency data and analysis firm.
Following the halving, Bitcoin experienced relative stability, with a slight 0.47% decline to $99,340.
What Does It Entail?
Enthusiasts of Bitcoin had been eagerly anticipating the halving, a modification in the cryptocurrency’s fundamental technology intended to reduce the pace at which new bitcoins enter circulation.
The concept of halving was integrated into bitcoin’s code during its inception by the pseudonymous creator Satoshi Nakamoto.
Chris Gannatti, the global head of research at WisdomTree, an asset management company that offers bitcoin exchange-traded funds, described the halving as “one of the major events in the crypto sphere this year.”
For some cryptocurrency enthusiasts, the halving emphasizes Bitcoin’s value as an increasingly scarce asset.
Satoshi Nakamoto set a limit of 21 million tokens for Bitcoin’s supply.
However, skeptics perceive the halving as merely a technical adjustment exaggerated by speculators to boost the virtual currency’s price.
How Does the Process Function?
The mechanism operates by halving the rewards received by cryptocurrency miners for generating new tokens, thereby increasing the cost associated with introducing new bitcoins into circulation.
This development follows Bitcoin’s price surge to an all-time high of $73,803.25 in March, after spending a significant portion of 2023 gradually recovering from the dramatic plummet of 2022.
As of Thursday, the most prominent cryptocurrency globally was trading at $99,462.
Bitcoin and other cryptocurrencies have gained support from the anticipation surrounding the US Securities and Exchange Commission’s approval of spot bitcoin exchange-traded funds in January, along with the prospects of central banks reducing interest rates.
Previous halvings occurred in 2012, 2016, and 2020.
Absence of Expected Price Surge
While some cryptocurrency enthusiasts anticipate a price surge following halvings, numerous analysts remain doubtful.
JP Morgan analysts stated this week that they do not anticipate a surge in Bitcoin’s price post-halving as it has already been factored in.
They predict a decline in Bitcoin’s price after the halving due to being “overbought,” coupled with subdued venture capital funding for the crypto industry this year.
Financial regulators have consistently cautioned against Bitcoin as a high-risk asset with limited real-world utility, although more regulators have started approving bitcoin-related trading products.
Andrew O’Neill, a crypto analyst at S&P Global, expressed skepticism regarding deriving price predictions solely from past halvings, emphasizing that various factors influence price movements.
Since reaching a record high in March, Bitcoin has faced uncertainty and experienced a decline in the past two weeks amid geopolitical tensions and concerns that central banks will maintain higher interest rates for an extended period.
Reuters