4 Reasons Why This Bitcoin Halving May Be Different
Bitcoin (BTC) halving is expected later this month but a confluence of factors is likely to set the cryptocurrency’s fourth such event apart from prior occurrences.
Halving—after which the rate bitcoins are generated by the network roughly every ten minutes is cut in half—typically occurs after 210,000 bitcoins are mined or roughly every four years. Halving is expected this year around April 20, but some suggest it could happen even sooner.
In the runup to prior halving iterations, bitcoin has scaled new highs in the months following the reduction in the crypto asset's rate of issuance.
Recently it reached a new all-time high before the current cycle's halving event for the first time. Analysts at Coinbase warn the market could be placing undue importance on price movements around halving without taking into account the context of broader market conditions.
“The performance of bitcoin around previous halving events was most likely context-dependent. That may explain why price trends during different cycles have varied so widely,” wrote in a March report.
For example, they attribute some of the 45% growth before the second halving in July 2016 to uncertainties surrounding Brexit and the 73% gain ahead of the third halving in May 2020 to the pandemic-era initial coin offering (ICO) boom.
Spot bitcoin exchange-traded funds (ETFs) have “fundamentally changed “ the market dynamics for bitcoin, according to Coinbase. And they did not exist at the time of prior halvings.
The products that began trading in January have seen massive inflows that have driven up demand and consequently the price of bitcoin.
“The approval of bitcoin ETFs in the U.S. could significantly alter the supply and demand dynamics of bitcoin, as
Read more on investopedia.com
