© Reuters
Investing.com – After the approval of Bitcoin exchange-traded funds (ETFs), investors and cryptocurrency enthusiasts are waiting for another event that tends to mark the entire ecosystem: the fourth halving of the BTC, which is expected to take place in April. Literally translated, halving means to cut in half. In other words, there is a decrease in cryptocurrency mining, which leads to a reduction in supply.
The Bitcoin network undergoes a halving every four years. Over the next year, the approximately 900 bitcoins that enter circulation each day will become 450, Metrix Research explains in a report.
“Historically, the cryptocurrency market demonstrates robust performance following a halving,” Binance says in a note on the 2024 outlook.
According to the Swiss group Julius Baer, also in a note to the market, in addition to the approval of the ETF, the fundamentals of bitcoin remain strong, taking into account “the increase in activity on the network and the upcoming reduction of half of the bloc, as well as the growing conviction that the United States’ fastest and most brutal cycle of monetary tightening is over.
Mercado Bitcoin (MB), Latin America’s largest digital asset platform, believes the halving provides a buying opportunity as the action decreases the circulation of the cryptocurrency, while demand is maintained, which leads to an appreciation of the asset. The event stimulates the ecosystem through the curiosity of physical and institutional investors, according to MB, by increasing the exposure of the currency, as well as providing new innovative solutions for the market.
“This reduction has a practical effect, in a fundamentalist way, from the point of view of the relevance of mining: during the first halving, in 2012, it was possible to identify a mandatory seller, with machines and energy costs”, recalls MB in a note, which specifies that at the time, the ecosystem was not as developed. “These miners had a strong influence on the environment. When the miner reward is halved, the flow of bitcoins decreases proportionally, allowing the market to experience greater competition,” adds MB.
Could bitcoin reach a new all-time high?
Given the momentum from ETF approval and anticipation of the halving, investors will be interested in the asset’s potential for appreciation and the possibility of it hitting a new all-time high . Combining these two measures could have powerful effects, according to a Hashdex report. “While the ETF can increase the demand for , the halving reduces the supply of new securities.
According to Metrix, it is possible that new all-time highs will be reached. “In all previous halving years, bitcoin has seen gains of at least 125%. For the 2024 halving, Metrix’s research system indicates an increase of between 100% and 207% in 18 months following halving.”
MB Research shares this opinion. In previous cycles, investments saw strong expansion during the same 90-day period before the halving and at the peak after the halving. “In 2012, bitcoin was valued at $12.25 and reached $1,132.00 at the peak of the cycle; in 2016, the value of the currency before the event was $455.18 and after, 19,188 .00. Finally, in 2020, bitcoin represented 8,755.00 dollars and, during the post-halving peak, it reached the mark of 69,000.00 dollars,” indicates MB in a note to the market, specifying that it is not yet possible to estimate how much the cryptocurrency could appreciate this year.
In addition to investing in bitcoin, cryptocurrencies such as BTC and altcoins tend to track the eventual appreciation of BTC, according to MB and Metrix.
As of 11:42 a.m. Brasilia time on Thursday, bitcoin was up 0.28% at US$39,997.
Source: Investing.com
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