A special month on the cryptocurrency market. This situation occurs once every four years
We are facing a unique event on the cryptocurrency market that happens approximately every four years. This is the bitcoin halving, expected on April 20.
We are facing a unique event on the cryptocurrency market that happens approximately every four years. This is the bitcoin halving, expected on April 20.
Bitcoin halving – what is it?
Bitcoin halving is a planned event in which the reward for mining and verifying new blocks is reduced by 50%, and miners earn only half of the BTC for the mined block. Bitcoin miners will receive a reward of 6.25 bitcoins for mining a block. So it is very large, since at the beginning of April the price for bitcoin was PLN 67.5 thousand. USD (PLN 267.5 thousand).
– After the halving, this reward will drop to 3,125 bitcon, so it will be halved – says Michał Stajniak, an XTB expert, in an interview with MarketNews24. – Bitcoin halving is carried out so that the supply of bitcoin does not increase indefinitely. The supply is therefore reduced every four years.
A reduction in supply should result in an increase in price. Usually, before and after “halving”, the increases were visible. This happens in the perspective of a year before halving and a year after.
– The largest increases usually take place just before halving – explains the XTB expert. – Later we see stabilization on the market and only within 150-200 days do we see spectacular increases again. In 2016 and 2020 these increases reached several hundred percent compared to the halving date.
What will happen after halving?
However, the situation on financial markets is different than then. Recently, the SEC gave approval to Bitcoin ETFs. ETFs bought bitcoin from the market at a much higher value than the daily reward for mining blocks. After the halving, it may turn out that funds will have to buy even more of this cryptocurrency on the market, which will drain liquidity and make bitcoin even more expensive.
However, these are theoretical considerations, since they concern such a speculative currency, the daily volatility of which often exceeded a dozen or several dozen percent. At the same time, hopes that the SEC will agree to the introduction of Ethereum ETFs are fading. All the more reason, bitcoin will remain the most expensive cryptocurrency.
– In the case of bitcoin and ethereum, the situation will be similar to that for gold and silver, gold is always much more expensive than silver – sums up M.Stajniak from XTB. – Investors will store Bitcoin similarly to gold.
