Key Points
- The upcoming 2024 Bitcoin halving is anticipated to impact the value of the cryptocurrency.
- Historical trends suggest a correlation between halving events and Bitcoin price appreciation.
The 2024 Bitcoin (BTC) halving is rapidly approaching, and investors are eagerly awaiting its potential impact on the cryptocurrency’s value.
Coinbase has recently provided an analysis on the expected effects of the upcoming halving on BTC, suggesting a historical correlation between halving events and significant price appreciation.
Understanding Bitcoin Halving
Bitcoin halving is a recurring event that takes place every four years. The last one occurred in 2020, reducing the BTC mining reward to 6.25 per block. This event is known to decrease the supply of BTC, consequently increasing demand and potentially boosting its value.
Research indicates that the BTC price experienced a substantial increase both prior to and following the last halving event. The price surged by 61% six months before the event and an impressive 348% in the six months after.
While these statistics may seem appealing to investors and speculators, it’s crucial to understand that there’s no definitive proof that the halving directly causes Bitcoin’s price to rise. The cryptocurrency’s performance is influenced by a complex amalgamation of various economic and market forces, not limited to the halving event.
Bitcoin’s Performance and Economic Conditions
For example, the exchange platform attributes some of Bitcoin’s success during the previous 2020 halving to the prevailing economic conditions, marked by relaxed monetary policies and significant fiscal stimulus measures implemented in response to the COVID-19 pandemic. These factors, in conjunction with the halving event, may have contributed to the asset’s bullish momentum. During this period, the price of BTC increased from $3,900 in March 2020 to $42,000 in December of the same year, a rise of about 977.843%.
Recent Trends: The 2024 Bull Run and SEC’s Approval
This price surge illustrates various factors that could affect the Bitcoin price. This year, the price of BTC has also been on an upward trend, and the reasons behind this increase could be attributed to the SEC’s approval of the first-ever spot bitcoin ETFs, which has allowed investors to have greater access to the coin through these financial instruments.
Since the approval of the BTC ETF in January this year, the price has moved from $42,189 to its current price of $67,000, which is about 59.306%. At one point, the price of the coin even spiked up to $73,000 before reversing to its current price, indicating bullishness so far this year.
The Coinbase report also highlights the behavior of long-term Bitcoin holders, often referred to as “hodlers” within the crypto community. It revealed that the current amount of BTC held by long-term holders is relatively high compared to historical levels, which could potentially reduce the available supply and exert upward pressure on prices during the halving.
While acknowledging the potential impact of the halving, Coinbase concludes that predicting Bitcoin’s future price movements remains a speculative endeavor. The exchange warns against relying solely on the halving as a predictor of market performance, emphasizing the importance of considering a multitude of factors that can influence the asset’s trajectory.