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Monday, September 25, 2023

Bitcoin halving countdown is on – will crypto prices rise?

New Bitcoin ‘halving countdown clocks’ are popping up everywhere online again as the crypto community looks ahead to the next halving event, which is most likely, say experts, going to happen between April and May 2024.

Bitcoin halving is a programmed event that occurs approximately every four years, reducing the rewards miners receive for validating transactions by half. 

The halving happens every 210,000 blocks. The 2024 halving will happen on block 840,000.

I believe that the cryptocurrency’s price will experience a significant surge in the run-up to this next halving event. Here’s why.

First, with each halving, the rate at which new Bitcoins are created decreases. This supply reduction is akin to a rare and predictable event in the world of traditional assets. 

Basic economic principles suggest that when supply diminishes and demand remains strong, prices tend to rise. As we draw nearer to the 2024 halving, investors can anticipate this supply reduction, driving up demand for Bitcoin.

Second, when we examine the history of Bitcoin halvings, a clear pattern emerges. Both the 2012 and 2016 halvings were followed by significant price rallies. 

This historical precedent has established a strong expectation within the crypto community that the 2024 halving will produce similar results. The anticipation of a price surge often leads to increased buying activity in the lead-up to the event, which, again, would likely contribute to a substantial price increase.

Third, the cryptocurrency market has come a long way since its early days. It has matured and gained greater acceptance among institutional investors and the general public. 

Large financial institutions, including hedge funds and asset management companies, have begun to allocate significant capital to Bitcoin. This growing institutional interest lends greater credibility to Bitcoin as an asset class and suggests that more capital will flow into the market as the 2024 halving approaches.

Fourth, Bitcoin’s digital scarcity, with a maximum supply capped at 21 million coins, makes it an attractive asset to hedge against inflation. 

As major economies continue to grapple with economic uncertainty and rising inflation rates, investors are increasingly seeking alternative assets like Bitcoin to preserve their wealth. This influx of capital into Bitcoin as a hedge would drive up its price in the months leading up to the halving.

Thousands of Bitcoiners held parties in cities across the world to celebrate the 2016 halving, and I imagine there will be more at next year’s event. 

Many more savvy investors will likely be quietly celebrating already in anticipation of a possible price surge in the run-up.

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