The concept of Bitcoin and its recent halving event in 2024 has attracted significant attention from the media and the cryptocurrency community. Bitcoin was introduced in 2009 as a decentralised financial system, offering an alternative to traditional currencies and financial institutions. With a capped supply of 21 million units, Bitcoin’s value is designed to appreciate over time, similar to natural resources like gold.
The fourth bitcoin halving event took place on April 19, 2024, and sparked debates about its impact on Bitcoin’s value and the broader crypto ecosystem. The halving is a modification in Bitcoin’s core blockchain technology that reduces the pace of new Bitcoin creation. It occurs every 210,000 blocks, approximately every four years, to manage inflation and preserve Bitcoin’s scarcity.
Following the recent halving, Bitcoin traded flat around $63,000, with the rate of new Bitcoin issuance reduced to 3.125. Speculation abounds regarding the event’s effects on Bitcoin’s market value, mining operations, profitability, and the global crypto asset ecosystem. While past halvings have led to increases in Bitcoin’s market value, attributing price variations solely to the halving events is challenging due to Bitcoin’s complex market dynamics.
Historically, Bitcoin’s halving events have created a bullish market sentiment due to a decrease in new coin supply. The 50 per cent reduction in new Bitcoin supply post the 2024 halving event is expected to drive prices upward, but price predictions are challenging due to limited empirical data and complex market dynamics. Concerns arise regarding mining profitability post-halving, potentially leading to miners exiting and posing a security threat to the Bitcoin network.
Bitcoin’s scarcity remains a key driver of its value, attracting long-term investors despite potential drawbacks. Some argue that scarcity boosts Bitcoin’s value, while others believe any impact is already factored into prices. The rise of Bitcoin Spot ETFs has made it easier for traditional investment companies to participate in the Bitcoin market, further solidifying Bitcoin’s role as a safeguard against traditional market instability. In conclusion, the latest Bitcoin halving is expected to impact the entire crypto ecosystem, marking an important milestone beyond a mere technical event.
Therefore, staying informed about developments and considering potential implications is crucial for corporates and investors. Additionally, the expectation of the US Federal Reserve’s dovish turn after the latest non-farm payrolls report might boost risk assets like Bitcoin in the near term. Ultimately, the Bitcoin halving event is a significant milestone for the cryptocurrency market, highlighting the importance of understanding its effects and implications for investors and the broader financial sector.
