Bitcoin underwent its fourth quadrennial “halving” on 19 April, seeing its prices remain relatively unchanged in the days surrounding the event.
The pseudonymous Bitcoin creator, Satoshi Nakamoto, still exerts influence on the asset’s prices fourteen years after its big debut, and the high number of people looking to buy Bitcoin online stands as proof. The protocol supporting Bitcoin, designed by an anonymous group of devs or individuals who have remained silent to date, has witnessed the fourth launch of the halving stage. The event has, to date, been synchronizing with price upturns, which got more visible as the days unfolded. It mainly boils down to the slashing of the rewards miners get after adding blocks to the chain, which now stand at 3.125 BTC per mined block, down from 6.25 BTC.
So, what exactly is the halving and how does it usually impact Bitcoin?
Remind me what the hailed halving is, again?
Before delving into the myriad possible scenarios and impacts that the halving of the BTCs granted to miners has on market prices, the wisest thing to do is remove the perplexities surrounding the hailed process, for there are numerous. The event principally comes down to the number of Bitcoins developed and registered.
Transactions carried out with cryptocurrencies are registered on a universally accessible decentralized ledger dubbed blockchain. These “trades” are uploaded on the chain by the “miners,” whose task is to squander them into “blocks,” which ultimately get “chained” together. The whole process unfolds with the assistance of special hardware and software that solves cryptographic problems. The successful miner is then rewarded in Bitcoins.
The protocol developer wanted the number of Bitcoins breaking into the market never to surpass 21 million, so the convention always controls the released coins. The limiting operation unfolds under the name of the “halving” and occurs every time 210,000 blocks are chained for approximately every four years.
Bitcoin will keep halving until 21M is in circulation, which is predicted to occur around 2140. The number, however, will never be this exact, as enough coins usually get lost without a trace to allow this specific number to be reached.
Could the event be “priced in”?
Many questions revolve around the halving possibility of being priced in, meeting the joint aspirations of every investor out there. However, this curiosity thrown around a lot these days involves numerous factors in the assessment process. For instance, Bitcoin hit a new ATH days before the halving’s completion. On March 12, it breached the $73,830 barrier. This is an example of a situation analysts attest to make a case for being priced in.
At the same time, the approbation of investment bigwig JPMorgan is remarkable. According to JPMorgan reps, Bitcoin post-halving price upturns may stand fewer chances than the most optimistic investors hope. There’s a reason why the asset’s price isn’t meeting everyone’s expectations.
Once, Bitcoin may still find itself in “overbought conditions” despite the latest price corrections. This status usually depicts recent fluctuations in the asset’s price and mirrors expectations that a correction is around the corner. Moreover, the values remain atop the bank’s volatility-adapted value of $45K when contrasted with gold. Shortly, it’s above the production cost of $42K, which is estimated to emerge after the halving.
It’s important to note that many disagreements emerge. For instance, John Glover, an ex-Barclays Bank Managing Director, draws attention to the potential time that the reward cut may understandably take to affect the market. While the average crypto disputant focuses completely on the historical Bitcoin price rises, few are worldly and pragmatic enough to talk about the lengthy period those explosive price upturns usually take before emerging.
So, how long should I wait?
Evidently, if you’ve made Bitcoin a part of your portfolio, you’re mostly down to estimate when the touted booming prices could come under your radar. Each halving has generally led to peak prices before the massive, already-frenzied corrections. Shortly, the actual milestone saw a development timeframe of 10 to 15 months.
On the other hand, there are no completely accurate predictions that tell you how much you should hold onto your crypto investments. The crypto market remains highly volatile and surprising, so the best thing you can do is perfect your estimation skills, keep tabs on worldwide economic, political, and geographical events, and remain down-to-earth.
The key remains patience, so feel free to practice yours confidently!
What about the 500-day range
When the first halving took place in 2012, Bitcoin’s price grew 16% over the following two months. Consequently, the 2016 halving saw the asset’s price drop by a joint 6% over the same 60-day period, in spite of the massive rally that was on the horizon for the year 2017.
Markus Thielen, head of research at 10X, explains the price growth as a result of decreased supply. Nevertheless, as a rule of thumb, investors must generally practice patience to see prices blast, which estimations envision 500 days post-halving. This bull run makes an exception, as Bitcoin’s price managed to touch a hearty $103.9K and take many cryptos up with it in less than 250 days since the halving. This unshakeable record is mainly caused by the presidential reelection of Donald Trump and convictions that a more crypto-friendly regulamentary framework would follow.
How could the event impact the asset’s price?
First, if we were to analyze historical performances, the event would inevitably impact Bitcoin’s price and the values of all of the other crypto coins surrounding it. Yet, the extent to which the leading crypto will be moved is never to be wholly guessed or predicted.
It’s worth noticing that dips inevitably occurred despite the massive rises that followed the last two halvings. Also known as winters, prices dropped to humble values that put investors’ faith in Bitcoin to the test. It was those moments when many did away with their holdings, too soon to rejoice over the consequent gains that followed.
