Impact post 2024 Bitcoin halving
The much-anticipated Bitcoin halving event has recently taken place. This rare event, which occurs approximately every four years, has significant implications for the cryptocurrency market. The halving event is a mechanism written into Bitcoin’s code that reduces the rewards earned by Bitcoin miners by 50 percent. This effectively slashes the number of new Bitcoins entering the market. After the 2024 halving, only 450 Bitcoins will now be created each day.
The halving mechanism is designed to cap the total supply of Bitcoin at 21 million by 2140. This ensures the scarcity of Bitcoin, a key feature that distinguishes it from traditional fiat currencies.
Historically, halving events have led to significant gains in the price of Bitcoin. However, analysts caution that past performance does not guarantee future results. The price of Bitcoin remained stable at $63,747 after the 2024 halving, suggesting that the event had already been priced in.
Despite this, investors are hopeful for a significant price increase in the future. After the May 2020 halving, the price of Bitcoin surged from around $8,600 to over $56,000 within a year. However, Andrew O’Neill, a crypto expert at S&P Global, expressed skepticism about the predictive power of previous halvings. He argued that the price of Bitcoin is influenced by a multitude of factors, and the halving is just one of them. In the aftermath of the 2024 halving, the cryptocurrency community is eagerly anticipating the potential impacts of this event. Some believe that the halving could cause a supply shock, driving volatility and a potential price rise.
Towards digital scarcity
Bitcoin hit a new high of $73,803 in March 2024, after rising 175 percent over the previous 12 months. The cryptocurrency also gained legitimacy when funds holding Bitcoin were allowed to be traded on the US stock exchange.
However, the mainstream financial industry still views Bitcoin as extremely high risk. Bank of England governor Andrew Bailey warned in 2021 that cryptocurrencies have “no intrinsic value” and investors should be “prepared to lose all your money”. As we move forward, the 2024 halving marks the beginning of a new era of digital scarcity for Bitcoin. With more than 19.5 million Bitcoins already mined, only 1.5 million remain to be mined over the next 116 years. This scarcity is likely to continue shaping the dynamics of the Bitcoin market in the years to come.
