The Bitcoin halving event is one of the most awaited events in the crypto market. The halving occurs approximately every four years, cutting the block reward for miners by 50% and diminishing the rate at which new bitcoins become available.
Large price increases have followed this trend throughout history. But will the 2024 halving buck the trend and trigger a crash?
The Bullish Argument: Institutional Interest and Supply Shock.
In the past, bitcoin halvings have led to spikes in price. 2012, 2016, and 2020 saw large bull runs. The main reason for the rise in prices is relatively simple. When supply is reduced and demand stays the same or increases, prices will rise.
Growing interest from institutions and major financial players in incorporating Bitcoin into their portfolios strengthens the bullish argument.
Furthermore, bitcoin exchange-traded funds (ETFs) have taken off, and that is giving traditional investors easier access.
More people are using Bitcoin, and regulations are getting clearer in some parts. If history does repeat, we can expect another rally after halving.
The Bearish Case: Miners in Trouble and No Certainty in the Market.
Despite the optimism, there are still risks that could bring the market down again. One key concern is the impact on miners. Because block rewards are reduced by half, mining may no longer be profitable, causing smaller miners to shut down.
If many miners are not part of the community, bitcoins take longer to process, and there is a temporary loss of confidence in Bitcoin’s stability.
Macroeconomic factors also play a crucial role. Higher interest rates, regulatory action, and a slowing economy could curb investor demand for risk assets such as bitcoin.
If crypto market flows decrease, Bitcoin may not grow enough due to the halving.
The Final Conclusion: A bumpy journey.
Although data indicates a price surge in Bitcoin after halving, the market is so dynamic that anything could happen. The institutionalization and widespread acceptance give agnostic undertones, but economic situations and miner profitability could be negatively impacted.
How these factors will play out in the coming months will determine whether Bitcoin will soar or stumble after the halving.
Investors should currently prepare for volatility while monitoring the mood.
For certain, Bitcoin’s halving will bring change, but whether it will be a boom or bust is something yet to be seen.
