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THREE REASONS WHY THE 2024 BITCOIN HALVING MAY BE DIFFERENT FROM PREVIOUS EVENTS

Bitcoin’s halving is one of the most popular events in the cryptocurrency and blockchain sector. Its effects are widespread, significantly affecting the Bitcoin blockchain and several other major altcoins. Although a halving is typical of several proof-of-work (PoW) networks, the entire industry largely anticipates the halving on the Bitcoin blockchain. Recent developments, like the launch of spot Bitcoin exchange-traded funds (ETFs), have made it so that players in the traditional market also anticipate the event.

What is Bitcoin’s Halving?

Bitcoin’s halving reduces the block rewards miners receive by 50%. Miners on the network solve complex mathematical puzzles to add blocks to the blockchain. For their effort, they receive some Bitcoin as payment, in addition to transaction fees. Bitcoin’s first block reward was 50 BTC, which reduced to 25 BTC after the first halving. Subsequent events reduced the block reward to 12.5 BTC and then 6.25 BTC. The 2024 halving event is expected to crash block rewards to 3.125 BTC.

The Bitcoin halving occurs every 210,000 blocks, which takes about four years. The event is a deflationary measure to reduce the volume of Bitcoins introduced to circulation and keep Bitcoin’s price relatively healthy and competitive. 

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Among other factors, the halving is considered responsible for influencing Bitcoin’s adoption over time. Today the asset is known to perform several functions, including payments for goods and services and application as an investment vehicle. Bitcoin is also known for fast payouts on sites like those on a list of crypto casino sites that offer gamblers the chance to enjoy exciting games with huge bonuses and instantaneous deposits and withdrawals.  

Another importance of the halving is that it pushes Bitcoin’s mining limit further. Bitcoin’s maximum supply is 21 million tokens, as envisioned by Satoshi Nakamoto. With the halving happening every four years, until this limit is reached, the estimated time for the maximum is 2140.

Why This Halving May Be Different

  • Unstable Bitcoin Price Action: Many people already consider Bitcoin’s halving as a bullish period for the network. Usually, Bitcoin’s price peaks a year after the halving event, sending the king coin to a new all-time high (ATH). However, the price of Bitcoin has already seen interesting gains in the period before the halving.

On March 11, Bitcoin scaled $71,000 and set a new record. Although bulls took the price movement as a sign that the king coin will continue to spike, Bitcoin has been unable to maintain its positive price action. According to CoinMarketCap data, Bitcoin is currently at $62,731, after falling more than 9% over the last 7 days. In addition, current MarketWatch data shows that Bitcoin has seen an increase of nearly 50% in year-to-date (YTD) performance. Unfortunately, this is lower than the 60% YTD rise recorded around the time Bitcoin hit a new record. 

  • Federal Reserve Decision on Interest Rates: The Federal Reserve recently ended a long campaign where it continuously raised interest rates multiple times following Federal Executive Open Committee (FOMC) meetings. With the apex bank still battling interest rates, the possibility that the agency’s decision will affect Bitcoin is high.

In general, many believe that a reduction in rates will weaken Treasury yields. This could push investors to assets like Bitcoin and altcoins like Ethereum and Solana, which are considered a little more risky than average. If this happens, the demand for Bitcoin, coupled with a reduction in the number of tokens introduced to circulation, could be considerably bullish for the king coin and lead to growing adoption of it and other cryptos, with more users flocking to platforms like a Solana casino or bitcoin marketplaces like Crypto Emporium.

However, a reverse may have the opposite effect on Bitcoin.

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The Federal Reserve has held interest rates at the 5.25% to 5.50% range since July 2021. Fortunately, the apex bank’s moves have paid off, with economic data indicating general improvement. However, this has sparked conversations about whether or not the Fed is ready to begin cutting rates. A decision to keep the rates high for longer than necessary could tilt the economy into a possible recession. However, cutting rates too soon could worsen inflation, erasing the progress the Fed has made over the last year. Whatever the Fed decides, Bitcoin could be affected regardless of the halving. An increase in inflation could lower the demand for Bitcoin as people function with reduced disposable income. On the other hand, a recession and a weakened economy could drive people to buy Bitcoin, hoping to use it as a functional hedge.

  • Spot Bitcoin ETFs and Demand: Perhaps the most significant reason why the upcoming halving may be different is the introduction of spot Bitcoin ETFs in January. The effect of the exchange-traded product might be difficult to determine because the variable did not exist at previous halvings. Nonetheless, it is essential to consider the impact of a Bitcoin ETF for two reasons. Firstly, this product has introduced significant demand for Bitcoin as issuers ensure there are enough Bitcoins tied to the ETF shares to meet investor demands. Secondly, the ETFs bridge the gap between the traditional market and the crypto industry, allowing retail and institutional players from the traditional market to enter crypto. However, this demand is why stakeholders like Marathon CEO Peter Thiel believe that not much price action may happen because the halving has already been priced in. According to Thiel, the ETFs have “essentially brought forward what could have been the price appreciation we typically would have seen three to six months post-halving.” 

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