Bitcoin Halving Completed: What Comes Next?
After reaching its 840,000th block, Bitcoin successfully underwent its fourth halving event on Friday, April 19th. The much-anticipated event of 2024 has now come to fruition. However, despite being a significant milestone in the world of decentralization, the hype surrounding the event seems disproportionate as the price of Bitcoin experiences a mundane sideways movement. So, what lies ahead for Bitcoin?
Quick Recap: Understanding Halving and Its Ramifications The Bitcoin Halving occurs when Bitcoin’s mining reward is halved. The blockchain network takes approximately four years to generate an additional 210,000 blocks, a protocol established by the blockchain’s creators to gradually decrease the rate at which new bitcoins are introduced. The initial reward was 50 bitcoins. Previous halving dates and their corresponding rewards were as follows:
- Nov. 28, 2012, reduced to 25 bitcoins
- July 9, 2016, reduced to 12.5 bitcoins
- May 11, 2020, reduced to 6.25 bitcoins
Following this fourth Halving, Bitcoin’s block reward has now dwindled to 3.125 BTC, resulting in diminished returns for miners.
What Lies Beyond the Halving?
Historically, Bitcoin has experienced three Halving events in three different years, each followed by a similar price trajectory: a substantial price surge over the subsequent months. However, immediately after Halving, Bitcoin typically enters a period of sideways movement, as witnessed in 2012 and 2020. Alternatively, in 2016, Bitcoin endured a 17% downturn and remained stagnant before embarking on a bull run to an all-time high.
Regrettably, 2024 presents a different landscape compared to the past three Halving years. This year, a new major player entered the exchanges: BlackRock. With the approval of the US ETF, the influx of funds to purchase Bitcoin surged dramatically. BlackRock’s ETF quickly gained momentum, propelling the price of Bitcoin to a new all-time high prior to the Halving.
The addition of BlackRock’s ETF introduces an element of unpredictability in the months ahead. However, from the perspective of miners, a surge in Bitcoin’s price movement is anticipated. With their rewards halved due to Halving, miners will seek to capitalize on the upward trajectory of Bitcoin before selling their holdings to offset reduced earnings.
Another significant player in the making is the Hong Kong Spot ETF. Since April 15th, Hong Kong has passed legislation legalizing a Bitcoin ETF similar to BlackRock’s. Consequently, another substantial influx of funds from Hong Kong and China is expected to enter the market to purchase Bitcoin. While BlackRock’s funds drove Bitcoin to new highs, the incoming funds from China and Hong Kong are poised to further elevate its price.
Are There Any Data That Supports An Upward Trajectory for Bitcoin in The Short Term?
The Miner to Exchange Flow, which tracks miners’ wallets transferring Bitcoin to exchanges, indicates that miners are not offloading their holdings in the short term.
The US Dollar Index has begun to decline from its previous highs. Bitcoin typically exhibits a correlation with the US dollar, meaning a fall in the dollar often results in a rise in Bitcoin’s price. Additionally, the decrease in political tension following Israel’s lack of retaliation to Iran’s attack provides a positive sentiment for higher-risk investments.
However, it’s essential to consider one critical factor: the Black Swan event. An unpredictable occurrence such as the Iran-Israel conflict or the Russia-Ukraine war could significantly impact Bitcoin’s trajectory. Therefore, it’s imperative for investors to factor in such possibilities. In a bullish market like this, it presents an opportunity to increase investments wisely.
In conclusion, whether Bitcoin experiences an immediate uptick or downturn, the outlook for Bitcoin in 2024 remains bullish. With the Halving event, coupled with the presence of BlackRock and the impending Hong Kong Spot ETF, Bitcoin is poised for a bullish trajectory in 2024. Embrace any temporary setbacks cautiously and manage investments prudently, for a bullish momentum lies ahead!
