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In just 14 days, Bitcoin will undergo its highly anticipated halving event. If we turn to historical trends, this could spark a bullish rise that could last for months. Ultimately, this could reach new all-time highs.
KEY TAKEAWAYS
- Countdown to Halving: In just 14 days, Bitcoin will undergo its highly anticipated halving event.
- Understanding Bitcoin Halving: Bitcoin halving, also known as ‘halvening’, occurs when the reward for mining new blocks is halved.
- Significance for Traders: Halvings are crucial for traders as they lead to a reduction in the number of new bitcoins generated.
- Historical Performance: Previous halvings in November 2012, July 2016, and May 2020 resulted in impressive returns within 12 months: 9,000%, 4,000%, and 700%, respectively.
- Pre-Halving Phase: On-chain analysis suggests Bitcoin has entered the pre-halving danger zone, characterized by significant price slumps.
- Expert Insights: While some experts believe halving events are significant drivers of Bitcoin’s price, others, like American crypto exchange Coinbase, caution against overestimating their impact.
- Fresh Capital Inflow: The rise of the spot Bitcoin exchange-traded fund (ETF) market has attracted fresh capital from traditional finance investors, potentially further propelling Bitcoin’s price beyond analysts’ expectations.
- Consideration of Market Dynamics: As the halving event approaches, it’s essential to consider broader market dynamics that could influence Bitcoin’s trajectory.
WHAT IS BITCOIN HALVING?
A bitcoin halving, also known as ‘halvening,’ occurs when the reward for mining new blocks is cut in half. This means miners receive 50% less bitcoins for verifying transactions. These halvings are scheduled to take place once every 210,000 blocks. That’s roughly every four years until the network generates the maximum supply of 21 million bitcoins.
For traders, bitcoin halvings are important. They lead to a reduction in the number of new bitcoins generated by the network, limiting the supply of new coins. If demand remains strong, this deficiency could potentially drive prices higher.
While previous halvings have caused rapid appreciation in bitcoin’s price in the months leading up to and following the event, it’s important to recognize that the circumstances surrounding each halving are unique. Demand for bitcoin can vary wildly, influencing its price dynamics.
APRIL HALVINGS
Based on insights from crypto data analytics platform Kaiko, Bitcoin might hit a new peak. It could happen nine to twelve months following the April 20 halving. Previous evidence reveals that digital currency has consistently seen significant gains within a year post-halving.
During a halving, the rewards for miners who validate transactions are cut in half. After the upcoming halving, the rewards will decrease from 6.25 BTC to 3.125 BTC. Previous halvings, occurring in November 2012, July 2016, and May 2020, led to impressive returns of 9,000%, 4,000%, and 700%, respectively, within 12 months. While the extent of Bitcoin’s surge remains uncertain, some analysts predict a potential increase of up to 200%.
On-chain analysis indicates that Bitcoin has already entered the pre-halving danger zone. This phase typically involves notable price slumps before the cryptocurrency begins its ascent post-halving. Once the pre-halving retracement concludes, Bitcoin enters a period of re-accumulation followed by a significant uptrend.
WHAT EXPERTS ANTICIPATE AFTER THE APRIL HALVING?
Not all experts agree on the influence of halving events on Bitcoin’s price. American crypto exchange Coinbase warned that while halving events are significant, they are not the only factor driving Bitcoin’s value. The platform emphasized the impact of other macroeconomic factors, such as U.S. Federal Reserve rate cuts, selling pressure from miners, and emerging companies from bankruptcy.
Additionally, the rise of the spot Bitcoin exchange-traded fund (ETF) market has opened doors for fresh capital from traditional finance investors to flow into the Bitcoin ecosystem. This influx of institutional investors and traditional finance capital could further propel Bitcoin’s price beyond analysts’ expectations.
While the upcoming halving event is anticipated by the crypto community, it’s essential to consider the broader market dynamics that could influence Bitcoin’s trajectory. With Bitcoin’s accessibility to a diverse range of investors, including institutions, its growth potential may indeed surpass current predictions.
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