The Bitcoin halving is happening this weekend, and the market will be volatile.
Analysts are bullish on Bitcoin's long-term future, predicting a price increase in the next 6 months.
Ethereum, DeFi, and RWA tokens are expected to do well after the halving, followed by a wider market correction.
Cryptocurrency enthusiasts worldwide are eagerly awaiting the fourth Bitcoin (BTC) halving, set to occur this weekend. This significant event is expected to inject fresh volatility into the already dynamic crypto market, prompting exchanges to refine their strategies for maximum advantage.
One notable development comes from BitMEX, which has raised the stakes on its Bitcoin perpetual swap, now offering an impressive 250x leverage, a notable increase from its previous 100x limit. This underscores the importance for traders and investors to adjust their portfolios in anticipation of potential gains.
Expert Insights: What’s Next?
Despite potential short-term turbulence post-halving, renowned crypto analyst Michaël van de Poppe remains optimistic about the industry’s prospects in the coming months. With institutional investors and retail traders gearing up for this event for the past three years, anticipation is at an all-time high. Moreover, the widely-tracked stock-to-flow model predicts a doubling in Bitcoin’s price within the next six months.
Expectance:
– #Bitcoin to consolidate. – #Altcoins bouncing in their Bitcoin pairs. – Narrative to shift to ETH and DePIN/RWA. – Altcoin strength from in Q2/Summer. – Corrections in Q3.
According to Poppe’s projections, following the halving, Bitcoin’s price is expected to hover between $61,000 and $72,000 as it absorbs increased buying pressure. This is anticipated to spark a resurgence in altcoins against the backdrop of Bitcoin’s strength.
Poppe suggests that Ethereum, along with emerging players like the Decentralized Physical Infrastructure Network (DePIN) and real-world asset (RWA) tokenization, will lead the charge in the second quarter. Looking ahead to the third quarter, a broader market correction is expected as a precursor to a monumental rally towards new all-time highs across various cryptocurrencies.
Elena is an expert in technical analysis and risk management in cryptocurrency market. She has 10+year experience in writing - accordingly she is avid journalists with a passion towards researching new insights coming into crypto erena.
The halving is intended to reduce inflation and preserve the cryptocurrency's value over time. Previous halving events suggest a pattern of bullish behavior in the months after a halving. The market has frequently shown significant value growth following the halving, which can be attributed to a scarcity shock.
While the immediate impact on bitcoin's price may not be significant, the halving is expected to have long-term effects on the supply-and-demand dynamics of the cryptocurrency. As the supply of new coins decreases, bitcoin's scarcity increases, which could lead to price appreciation over time.
A Bitcoin halving event occurs when the reward for mining Bitcoin transactions is cut in half. Halvings reduce the rate at which new coins are created and thus lower the available amount of new supply. Bitcoin last halved on April 19, 2024, resulting in a block reward of 3.125 BTC.
The Bitcoin network on Friday evening completed its fourth "halving," reducing the rewards earned by miners to 3.125 bitcoins from 6.25. The price of bitcoin has been volatile ahead of the event, and fell about 4% this week to trade around $64,100, according to Coin Metrics.
The empirical evidence from this study suggests that bitcoin halving events are associated with significant negative stock market reaction, signaling a trading tradeoff between cryptocurrencies and U.S. stock markets.
The upcoming 2024 halving will see this reward decrease from 6.25 BTC to 3.125 BTC per block, a change that aims to reduce Bitcoin's inflation rate and enhance its scarcity. Read a more in-depth look at the concept of halving.
Consider this: if it were universally anticipated that bitcoin's value would surge immediately following the 2024 halving, investors would likely move to acquire bitcoin before the event, driving up its price in the present rather than in the future.
Bitcoin halving is considered bullish because each event reduces the rate at which future bitcoins are created. This then boosts the scarcity and value of existing bitcoins. But a positive effect isn't guaranteed.
The halving will likely not cause a significant movement in price on the day it happens. Part of the economic impact of the halving has likely already occurred, with investors buying bitcoin in anticipation of the event, and the aftershocks of the halving will continue for months or years afterward, experts say.
Altcoins (alternative coins), essentially any cryptocurrency other than Bitcoin, are set to receive a knock-on effect from the halving. The interconnectedness of Bitcoin and altcoins goes well beyond price correlation.
Bitcoin halving events have historically been associated with price increases. This is because the reduced rate of new Bitcoin creation can cause scarcity, potentially driving up demand and, as a result, the price.
“As the halving approaches, speculation typically increases, potentially leading to heightened volatility in the bitcoin market,” he says. “Investors might buy into bitcoin in anticipation of potential price increases, but there's no certainty or guarantee of that and, quite frankly, this only adds to the volatility.”
Generally, halving seems to have triggered price increases in the past. According to research by crypto tax consultancy CoinLedger in the six months following the last two halvings, the value of BTC increased by 51% and 83% respectively.
Fourth halving: The Bitcoin fourth halving is anticipated to occur around mid-April 2024, reducing the block reward from 6.25 Bitcoins to 3.125 Bitcoins per block.
The next bitcoin halving is expected to occur in April 2024, when the number of blocks hits 740,000. It will see the block reward fall from 6.25 to 3.125 bitcoins. The exact date of the halving is not yet known as the time taken to generate new blocks varies, with the network averaging one block every ten minutes.
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