April’s Bitcoin halving is uniquely significant, setting it apart from past events.
According to observers in the crypto-market, Bitcoin halvings have traditionally been seen as a positive event for the cryptocurrency. The upcoming halving, anticipated in April, may have a more advantageous setup than previous cycles.
Halving is a feature included in the Bitcoin blockchain’s algorithm that regulates the coin’s supply, which is limited to 21 million. During halvings, the reward for bitcoin mining is reduced by half, resulting in miners receiving 50% fewer bitcoins for confirming transactions.
Halvings are scheduled to occur every 210,000 mined blocks, which equates to approximately every four years, until the total supply of bitcoin has been fully released.
According to historical data, Bitcoin BTCUSD, -0.18% typically experiences price increases in the months following halvings. The upcoming halving is projected to occur on April 19, as forecasted by Swan Bitcoin, a bitcoin investment platform.
However, according to Cosmo Jiang, portfolio manager at Pantera Capital, this specific halving occurs for the first time in the history of Bitcoin where the cryptocurrency is affected by various factors that influence both its supply and demand.
Jiang stated in a call that as halvings impact the bitcoin supply, bitcoin exchange-traded funds are driving consistent daily investments into the crypto market from the demand side. In a historic move, the U.S. Securities Exchange and Commission approved 10 bitcoin ETFs in January. With increased involvement from institutional investors, bitcoin has surged close to its previous peak, just under 50 days before the anticipated halving event. Bitcoin’s value has risen over 40% this year, reaching around $62,600, and is now only slightly below its all-time high of $68,990, achieved in November 2021.
According to Martin Leinweber, digital-asset product strategist at MarketVector Indexes, this run-up differs from bitcoin’s historical pattern prior to halving. Leinweber pointed out that historically, bitcoin’s performance has been relatively subdued in the two to three months leading up to halving.
According to Adam Swick, the chief growth officer at Marathon Digital Holdings Inc., the Bitcoin blockchain is currently more secure than it was in previous halvings. In February, the total hash rate of Bitcoin reached a record high of approximately 600 million terahashes per second, which helps address any worries about the blockchain’s security following the halving. This is because some miners may have to stop operating when their rewards are reduced by half.
Although halving typically benefits the value of bitcoin, the cryptocurrency’s price is often unstable during uncertain macroeconomic conditions. This could be the case at the moment, with concerns among investors about the potential slowdown in disinflation progress and uncertainty surrounding the timing of interest rate cuts by the Federal Reserve.