The next major cryptocurrency event will take place in a couple of hours.
Bitcoin Halving is the event payment Bitcoins to miners are literally cut in half. It happens once every 210,000 blocks are mined on the Bitcoin blockchain, which takes about 4 years.
Why Are Investors Watching Bitcoin Halving Closely?
You see, unlike money, Bitcoin It is designed to have a fixed supply limit of 21 million coins. The Bitcoin Halving event was designed as a check on the issuance of new Bitcoins over time.
The rate at which new bitcoins are created is cut in half, increasing scarcity. This scarcity adds to Bitcoin's value proposition, assuming that when supply is low, demand would rise.
Therefore, investors expect Bitcoin prices to rise after the halving.
On the other hand, the cost of Bitcoin mining will increase after halving. Bitcoin miners will have to find ways to lower their costs or come up with new ways to extract value from their current setup. So if you're investing in Bitcoin mining stocks, you might want to re-evaluate your holdings.
Will Bitcoin Rise After Halving?
HistoricallyBitcoin halving events have been associated with bull markets and significant price increases in the months leading up to and following the event.
Despite the fact that Bitcoin prices are known to be volatile, it is worth noting that Bitcoin has also remained above the price of previous halvings:
This pattern suggests that investors are anticipating a reduction in supply and the potential impact on price, leading to increased demand and upward pressure on prices.
This prospect may lead to increased attention and positive sentiment in the market to attract new investors and participants.
This year, that prediction may have had a big impact since it was approved Bitcoin Spot ETFs. With a more convenient vehicle to enter Bitcoin, the halving event could attract retail investors who can bring in even more capital, pushing Bitcoin to greater heights.
Having said that…
Beware of Hype
While it is important to note that the halving is often seen as a positive factor, the crypto market is complex, influenced by many factors and can be subject to volatility.
Without proper guidance and education, entering the crypto space because of the hype will often lead to losses. Therefore, investors should do thorough research, understand the risks involved and consider various factors before making investment decisions.
tl; dr. Bitcoin Halving controls the issuance of Bitcoins. While the demand for Bitcoins may fluctuate, the supply of new Bitcoins will be halved indefinitely from this point forward. The current correction may provide a good entry point before the next halfway point. However, you must recognize that cryptocurrency remains a highly speculative vehicle.
I'll share the lessons I wish I knew before I started investing in cryptocurrencies, the trends I'm looking for, and how I'm managing my cryptocurrency portfolio in 2024. Join me to learn more!
