Bitcoin, the world’s largest cryptocurrency, has recently completed its fourth halving event since its inception. The halving, which occurred on Friday, April 19, 2024, is a significant milestone in the cryptocurrency’s lifecycle.
The event, which is part of Bitcoin’s original code, reduces the rewards received by miners for creating new tokens, effectively cutting the rate at which new bitcoins enter circulation.
TLDR
- Bitcoin recently completed its fourth halving, which reduced the rewards for miners creating new tokens.
- Bitcoin prices remained relatively stable after the halving, hovering around $66,000.
- The halving is part of Bitcoin’s code, capping the overall supply at 21 million tokens.
- Some crypto enthusiasts believe price rallies follow halvings, but analysts are skeptical of post-halving price increases this time.
- The SEC approved several spot bitcoin ETFs in January, expanding investors’ access to the cryptocurrency.
The halving mechanism, introduced by Bitcoin’s pseudonymous creator Satoshi Nakamoto, is designed to control the supply of the cryptocurrency.
With a capped overall supply of 21 million tokens, the halving events occur approximately every four years, with previous halvings taking place in 2012, 2016, and 2020.
By reducing the mining rewards, the process makes it more expensive for miners to create new bitcoins, thereby slowing down the rate at which the remaining supply is released.
In the days leading up to and following the recent halving, Bitcoin’s price remained relatively stable, fluctuating around the $65,000 mark.
This stability comes after a tumultuous year for the cryptocurrency, which saw prices plummet in 2022 following the collapse of the FTX cryptocurrency exchange, only to recover to all-time highs in March 2023.
Some cryptocurrency enthusiasts point to historical price rallies that followed previous halvings as an indication that Bitcoin’s price may rise in the aftermath of the latest event.
However, analysts from JP Morgan are skeptical of such price increases this time around, arguing that the potential impact of the halving has already been priced in. They predict that Bitcoin’s price may actually fall post-halving, citing factors such as the cryptocurrency being “overbought” and subdued venture capital investment in the crypto industry this year.
Despite the mixed opinions on the potential price impact of the halving, the cryptocurrency market has seen increased mainstream acceptance and regulatory approval in recent months.
In January 2024, the U.S. Securities and Exchange Commission (SEC) approved several spot bitcoin exchange-traded funds (ETFs), allowing investors to gain exposure to the cryptocurrency without directly purchasing tokens through a crypto exchange.
The approved ETFs include offerings from major financial institutions such as BlackRock, Fidelity, and Invesco, among others.
The introduction of spot bitcoin ETFs marks a significant milestone in the mainstream adoption of cryptocurrencies, providing investors with a more accessible and regulated way to invest in Bitcoin.
By enabling investors to buy into the cryptocurrency through traditional brokerage accounts, these ETFs have the potential to attract a wider range of investors who may have previously been hesitant to engage with the crypto market directly.
