Saber2pr's Blog


The halving mechanism could have a significant impact on the price of Bitcoin, the world's largest cryptocurrency, and pose a threat to Bitcoin miners. Today, Bitcoin is the world's largest digital currency by market capitalization because it has many unique features, the most important of which is its deflationary design, the so-called "halving" mechanism. The "halving" mechanism of Bitcoin is essentially a reduction in the systematic and algorithmic nature of Bitcoin block rewards, which means that miners use special power-consuming computers to verify blocks to receive awards by 50 per cent. The next half, planned for April 2024, will reduce miners' income to 3.125 bitcoins ($94000) per block, compared with the current equivalent of 6.25 bitcoins ($189000). Bloomberg released a report by David Pan on the impact of the bitcoin "halving" mechanism on the cryptocurrency market. In the article, the author points out that the quadrennial incident could have a significant impact on the price of Bitcoin and pose a threat to Bitcoin miners. The authors point out that the first halving occurred in 2012, the second halving occurred in 2016, the third halving occurred in 2019, and the fourth halving is expected in April next year. Logically, after each "halving" is completed, the motivation for Bitcoin mining weakens, and the event will lead to a sharp rise in Bitcoin prices. Historically, the first three halves have been accompanied by a sharp rise in the price of bitcoin. Bitcoin prices rose 8450% in 2012, 29% in 2016 and 560% in 2019. After the next half, the production cost of Bitcoin is expected to reach about $40,000. On the other hand, a report released by CoinBase, the largest cryptocurrency exchange in the US, said the impact of the upcoming "halving" of bitcoin is still unclear because many external factors play an important role in market behaviour. The report points out that while many experts are positive about the halving event because they believe it increases the potential scarcity of Bitcoin and supports its supply and demand dynamics, it is difficult to clearly predict the market's response to price movements because it still requires deciphering the impact of dollar, interest rate and global liquidity movements. The report stresses that monitoring the impact of global liquidity will clearly reveal the performance of the asset in various economies, as the cryptocurrency market has been tracking the direction of global liquidity since adverse market events occurred between May and June 2022. The authors believe that the next "halving" of bitcoin, to be held in the second quarter of 2024, could have a positive impact on the performance of the world's best-known digital currency. However, the evidence supporting this relationship is still largely speculative. Currently, the price of Bitcoin is around $4w. The digital currency has risen 50% since the start of the year, but it is still well below the all-time high of nearly $69000 set in November 2021. Bitcoin's recent rise coincides with the submission of applications in the United States for the establishment of Bitcoin exchange-traded funds, including Blackstone, which has an exemplary record of obtaining approval for the establishment of exchange-traded investment funds.