Bitcoin, the world’s largest cryptocurrency, is set to undergo its halving event in mid-April 2024. This event, which occurs every four years, cuts the mining rewards for Bitcoin in half. Currently, miners receive 6.25 BTC for validating transactions, but this will decrease to 3.125 BTC after the halving.
The halving event poses practical challenges for miners as their income is suddenly reduced by half. However, market sentiments are generally bullish in the long term, according to Henry Robinson, Co-Founder and Head of Crypto at Decimal Digital Currency. He cautions that significant volatility can be expected around such a major event.
Robinson predicts that there will be exuberant bullish action and dramatic sell-offs before and after the halving. However, once the dust settles, he expects Bitcoin to reach new all-time highs and achieve major milestones in its integration with global finance over the next two years.
In terms of the pre and post-halving trends, Robinson highlights several key aspects. He notes that after each halving, Bitcoin has experienced massive surges, signaling the start of bull markets. This year’s halving is expected to have a similar outcome, especially considering the increasing institutional interest in Bitcoin. Bitcoin ETFs, in particular, have been successful, accumulating significant inflows and contributing to the decrease in monthly new BTC supply.
Robinson also acknowledges the recurring trend of price dips before halvings, followed by significant recoveries afterward. He suggests that a correction or dip in price may occur before the halving, presenting a “buy the dip” opportunity. However, he also acknowledges that the current bullish sentiments may continue, as buyers show no signs of stopping.
Regarding the magnitude of price increases after halvings, Robinson explains that mathematically, the impact of the halving lessens each time. However, the overall demand for Bitcoin is currently unprecedented, with Bitcoin acting as a global reserve asset. This macroeconomic rebalancing, coupled with the imminent halving, suggests that the magnitude of price increases may still be substantial.
In terms of the recent approval of spot Bitcoin ETFs, Robinson believes that it will have a positive impact on the upcoming halving. The market is becoming smarter and more informed, with the liquidity from ETFs making Bitcoin pricing more rational and thwarting market manipulation. Additionally, the approval of Bitcoin ETFs has opened the door for traditional asset managers to explore Bitcoin as an investment option, leading to increased adoption.
Robinson’s Bitcoin price predictions align with those of other industry players, such as Ripple CEO Brad Garlinghouse, who anticipates that events like the halving and ETF approval will drive the overall crypto market capitalization to exceed $5 trillion by the end of 2024.
Overall, the market should prepare for short-term volatility in Bitcoin trading following the halving event.
