The quadrennial event known as “the halving” is nearing, which involves an automatic 50% reduction in the number of bitcoin entering circulation. This event is a key part of the design of bitcoin and is seen as a way to push the value of the cryptocurrency higher while keeping inflation in check. The halving is considered a significant event for crypto believers, akin to the World Cup, as emotions run high and speculation about the impact on bitcoin’s price is prevalent. Some experts predict that bitcoin’s price could double in value within eight months following the halving, reflecting a bullish view within the bitcoin community.
Bitcoin, as the world’s first and largest digital currency, recently hit a record high of $73,750 in March, partly fueled by excitement over the halving and the regulatory approval of bitcoin-based exchange-traded funds in the United States. These ETFs provided mainstream investors with a way to gain exposure to bitcoin’s movements without actually owning the digital currency, leading to significant inflows of funds into bitcoin and driving up its price. The timing of the halving is based on the rate at which bitcoin tokens are mined and estimates suggest that the halving will occur in April 2020, resulting in a further decrease in the mining reward from 6.25 bitcoin to 3.125.
There are contrasting views on the impact of the halving on the price of bitcoin, with some skeptics warning that digital assets have yet to prove their use case in the real world and are risky investments. Critics argue that the past price movements of bitcoin may not have been solely caused by the halving, but rather correlated with other macroeconomic factors and investor sentiment. However, proponents of bitcoin point to its scarcity, with only 21 million bitcoin ever to be in existence, as a key factor contributing to its value. While some, like JPMorgan Chase’s Jamie Dimon, view bitcoin as a worthless investment, others see potential in its scarcity model creating real value.
Despite differing opinions on the long-term value and impact of the halving on bitcoin, many experts believe that the event will lead to bullish price action in the cryptocurrency market. Institutional adoption of bitcoin is seen as a sign of its maturation as an asset class, with expectations of significant price increases over the next few years. However, the volatility surrounding events like the halving remains unpredictable and can lead to extreme price swings in the crypto market. Overall, the halving is a highly anticipated event among bitcoin enthusiasts, with hopes of price increases and validation of the cryptocurrency’s value proposition.
