Bitcoin halving turns out to be price non-event
The fourth Bitcoin halving took place on Saturday and as predicted, turned out to be a price non-event.
The process of Bitcoin halving and its implications.
A Bitcoin halving takes places around every four years, lowering the reward miners receive for validating transactions by half. This mechanism ensures scarcity and helps control inflation in the Bitcoin network.
This time around, the rewards earned by miners were halved to 3.125 Bitcoins from 6.25.
With each halving, the rate of new supply entering the market decreases, thereby making Bitcoin increasingly scarce over time.
As I was quoted by CBS News, MSN, Investing.com, Financial Mirror, Investor Ideas, Investment International, The Armchair Trader, Trust Net, IT Online, and Tech Round, amongst other media, despite the halving event being one of the landmark moments in crypto, this year it didn’t move the needle too much in terms of values.
Analysing the immediate and anticipated effects on Bitcoin’s value.
Investors, traders, and speculators priced-in the bitcoin halving months ago. Therefore, a significant portion of the positive economic impact was experienced previously. Consequently, driving prices up to fresh all-time highs a month ago.
Indeed, the world’s largest crypto reached a new record high of $75,830 on March 14, 2024.
The effects of the halving are not solely confined to the day it occurs.
Instead, they gradually unfold over time. This impacts market dynamics and, as history shows, drives prices upwards in the months and years that follow.
The decrease in the rate of new supply enhances scarcity, further solidifying Bitcoin’s status as a store of value asset.
The long-term narrative often plays a more significant role in shaping investor sentiment and price trends than the immediate impact of the halving itself.
Examining past halving events and their influence on price trends.
Following the first halving in November 2012, Bitcoin’s price soared around 9,500% to a high of $1,160 over 367 days.
Then, the 2016 halving saw the price rise by 3,040% over 562 days to 19,660, and the 2020 halving saw it soar by 802% to a high of $73,800 over 1,403 days.
Furthermore, the price of Bitcoin was volatile ahead of this year’s halving event, and last week declined around 4% to trade at $64,100, as per Coin Metrics data.
Yet, despite being something of a price non-event, the main significance is down to the positive impact it will have in the longer-term on the price of the number one crypto.
To read my previous blog post click here.