Bitcoin’s next “halving” event, which occurs approximately every four years, is just nine months away. Expected to take place on April 26, 2024, at Block 840,000, this event will lead to a reduction in the inflation rate of Bitcoin. Currently, 6.25 BTC are produced every ten minutes, but after the halving, this will decrease to 3.125 BTC. This much-anticipated event is believed to have bullish implications for the price of Bitcoin, among other factors. Dennis Porter, CEO of the Satoshi Act Fund, even predicts that this halving will initiate “the largest parabolic upward move in Bitcoin’s history.”
Just like any other asset, the price of Bitcoin is influenced by the laws of supply and demand. When an asset is scarce or highly desirable, its price tends to rise, and conversely, when it is plentiful but lacks demand, its price falls. Therefore, it can be theorized that when a Bitcoin halving occurs, the available supply of BTC in the market decreases. Over time, this scarcity is expected to contribute to an appreciation in Bitcoin’s price.
When we examine Bitcoin’s past halving events in 2012, 2016, and 2020, there is evidence to support this theory. Following each halving, Bitcoin experienced parabolic bull runs that led to new all-time highs in late 2013, 2017, and 2021, respectively. This historical pattern suggests that halvings have had a significant impact on Bitcoin’s price.
However, not everyone is convinced that the 2024 halving will yield similar results by 2025. Hochan Chung, the Head of Marketing at CryptoQuant, believes that the effect of halvings on Bitcoin’s price will diminish over time as the new supply limit continues to decrease significantly. Coinbase analysts also published a report suggesting that previous bull markets following halvings may have been influenced by macroeconomic factors coincidentally, rather than solely by the halving itself.
Despite the skepticism, numerous institutions are already displaying bullish sentiments towards Bitcoin’s future. Mining companies such as Riot, CleanSpark, and Iris Energy have made substantial infrastructure investments this year, specifically in preparation for the 2024 halving. Furthermore, analysts from Standard Chartered Bank have predicted that Bitcoin could reach $120,000 per coin by 2025. Their thesis is based on the expectation that miners will hold onto their coins during the bull cycle, reducing the available supply in the market. Robert Kiyosaki, the author of “Rich Dad Poor Dad,” shares the same price target.
Not only are institutions placing their bets on Bitcoin, but retail investors have also joined the HODLing trend. With increasing awareness and understanding of Bitcoin’s potential, retail investors are becoming actively engaged in the cryptocurrency market, further driving demand for Bitcoin.
The upcoming Bitcoin halving in 2024 has generated significant anticipation and excitement among investors. While historical data supports the notion that halvings have positively impacted Bitcoin’s price, there is room for skepticism, as theories suggest the effects may diminish over time. Regardless, both institutions and retail investors are positioning themselves for potential gains, making Bitcoin’s future uncertain yet promising. Only time will tell if history will repeat itself once more.
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