Bitcoin’s next “halving,” an event that occurs approximately once every four years and reduces the asset’s inflation rate, is fast approaching. Expected to take place on April 26, 2024, at Block 840,000, the halving will decrease the number of Bitcoin (BTC) produced every ten minutes from 6.25 BTC to 3.125 BTC. This event is anticipated to have bullish implications for the price of Bitcoin, as explained by Dennis Porter, CEO of the Satoshi Act Fund, who believes it will spark “the largest parabolic upward move in Bitcoin’s history.”
The price of Bitcoin, like any other asset, is influenced by the fundamental principles of supply and demand. When an asset is scarce and highly sought after, its price tends to rise. Conversely, when an asset is abundant but lacks demand, its price tends to decline. The Bitcoin halving is expected to decrease the supply of BTC available on the market. Over time, this reduction in supply is believed to contribute to the appreciation of Bitcoin’s price due to its increasing scarcity.
Historical data seems to support this theory. Following previous Bitcoin halving events in 2012, 2016, and 2020, the cryptocurrency experienced significant bull runs that led to new all-time highs in late 2013, 2017, and 2021, respectively. However, some analysts are skeptical about whether the 2024 halving will have a similar impact by 2025. CryptoQuant’s Head of Marketing, Hochan Chung, suggests that the effect of halvings on Bitcoin’s price may diminish over time as the new supply limit decreases significantly. A report by Coinbase analysts also raised doubts about the direct correlation between halving events and Bitcoin’s price action, suggesting that previous bull markets may have been influenced by coincidental macroeconomic factors rather than the halving itself.
Institutions Prepare for the Halving
Despite the skepticism, many institutions are already expressing optimism for Bitcoin’s future and making significant investments in preparation for the 2024 halving. Bitcoin mining companies such as Riot, CleanSpark, and Iris Energy have made substantial infrastructure investments this year, anticipating the potential for Bitcoin to reach new highs. Additionally, Standard Chartered Bank analysts have predicted that Bitcoin could reach $120,000 per coin by 2025. They believe this surge in price will be driven by miners hoarding their coins during the bull cycle, reducing the available supply in the market. Notably, Robert Kiyosaki, the author of “Rich Dad Poor Dad,” shares the same price target.
Retail investors, commonly referred to as “shrimps,” have also joined the movement. On-chain data reveals that Bitcoin addresses holding less than 1 coin are accumulating over 33,000 BTC per month, surpassing the amount created by all miners. This trend indicates that smaller investors are holding onto their Bitcoin, possibly in anticipation of future price increases.
The Uncertain Future
While the upcoming Bitcoin halving is generating excitement among investors and experts alike, it remains uncertain how it will impact the cryptocurrency’s price in the long run. The decreasing supply limit may not have the same pronounced effect as previous halvings, and other macroeconomic factors could play a more significant role. Nevertheless, the preparations made by institutions and the growing accumulation of Bitcoin by retail investors suggest a widespread belief in the potential for a parabolic upward move in Bitcoin’s price. As the halving draws nearer, the stage is set for a momentous shift in the world of cryptocurrency.
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