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How will Bitcoin's Halving affect the cryptocurrency world in 2024?
Get ready for the next Bitcoin Halving, prevised for Wednesday, April 17, 2024, marking its fourth iteration since Bitcoin's inception. With the block height set at 840,000, this event will witness a reduction in reward, from 6.25 to 3.125 Bitcoin per validated block.
The implications of this event on the cryptocurrency market as a whole, as well as on Venionaire's cryptocurrency fund, "Tigris Web3", are of great interest to analysts and enthusiasts.
Introduction to Bitcoin halving
Bitcoin Halving is a pre-programmed reduction in the premium miners receive for validating transactions on the Bitcoin network. The process takes place every 210,000 blocks mined (approximately every 4 years).
The mechanism ensures that the total Bitcoin supply is limited to 21 million coins. With each halving event, the premium for mining new blocks will be halved, resulting in a gradual reduction in the rate of new bitcoin creation.
From a macroeconomic perspective, the concept of reducing the pace of new supply while holding steady or increasing demand always provokes optimistic sentiments among market participants. This anticipated scarcity has historically been associated with upward price movements in the run-up to a halving event, making it a significant milestone for the bitcoin ecosystem.
Bitcoin price forecast for 2024
- Optimistic momentum: Bitcoin's impending rise is supported by strong indicators, reflecting optimistic market sentiment supported by factors such as rising investor confidence and positive market sentiment.
- Dynamic Price: Bitcoin's current valuation of around $43,000 strategically puts it on an upward trajectory. The coin is looking at a challenging, but promising, resistance range between $48,000 and $53,000.
- Key levels and targets: Breaking above $53,000, the market cap marks a crucial milestone for Bitcoin price, behind which lies the $62,000 resistance level, an area that historically acted as a sell limit prior to Bitcoin's all-time high of $69,000.
The economic importance of Bitcoin's Halving
Historically, bitcoin block halving events have precipitated cryptocurrency market shortages, causing upward pressure on the price, which explains the price swings observed after each halving event.
Based on past events, expert and popular social media commentator BitQuant predicts that the price of bitcoin could reach an all-time high after the Halving event. This statement is not surprising, considering that all past events have preceded record highs in the price of bitcoin. BitQuant speculates that the price could reach an astronomical $250,000, nine times the current value.
This event comes at a good time after the crypto-winter of 2022 and the economic recession of 2023. By slowing BTC creation, Bitcoin supply is restricted over time. Here, a scarcity similar to that of gold applies.
Bitcoin's deflationary characteristic attracts investors trying to retain their capital in a world where inflation devalues traditional currencies.
Halving processes are predefined, transparent and predictable, unlike the discretionary judgments of central banks in traditional monetary systems. Investors feel secure in regularity, especially in unpredictable economic times. Bitcoin's strict monetary policy, aspired to through halving, attracts people wary of central bank actions and policy changes.
Many gold aficionados consider Bitcoin a valuable asset. Gold has always protected against inflation and provided a safe haven during economic downturns. Bitcoin, in its digital form, has similar characteristics. Gold investors prefer to halve Bitcoin because they reduce supply, which is similar to gold mining. The notion of digital gold indicates that Bitcoin can play a comparable role in the digital realm. Cases of Bitcoin halving are notable for long-term investors, because both Bitcoin and gold are deflationary
Impact of halving on the Bitcoin price
.The price of BTC can be affected by Halving in this way:
- Rewards are halved, which promotes healthy and sustainable network growth. By reducing the rate at which new bitcoins are generated, halving ensures that Bitcoin supply remains limited and finite.
- Bitcoin's inflation rate decreases after halving, which means that the influx of new bitcoins is reduced.
This issue is often debated among analysts and market participants. Some believe that halving will lead to a significant increase in the price of Bitcoin, as the reduction in the inflation rate will lead to higher demand and a corresponding increase in value. Others argue that the halving is already discounted in the market and that the event will not affect the cryptocurrency's price
Impact of Bitcoin's Halving on miners
Bitcoin mining is resource and energy intensive. According to some estimates, 1,449 kilowatts of electricity per hour are used to complete a single Bitcoin transaction. That's the amount of energy an American family can use in 55 days. Halving the rewards for mining can impact miners. The cost of mining increases while rewards decrease.
The industry standard for measuring profitability is in dollars per terahash (TH) per second, which refers to the money generated by a mining rig producing one billion hashes per second. You can use mining calculators to find the hash rate and evaluate profitability.
Although the price of Bitcoin is volatile, l** Bitcoin mining at its peak in 2017 produced $3.39 per TH/s**, but by mid-2022 it had fallen to $0.104 per TH/s. The halving of rewards will further affect miners' profitability, so most miners can only expect to make a profit during a bullish streak.
Conclusion
Halving Bitcoin has pros and cons. For example, halving Bitcoin affects the rate of new BTC, creating scarcity, which can cause the Bitcoin price to appreciate. This comes at the cost of short-term volatility in the Bitcoin price, driven by the uncertainty created by halving.
Halving has its main implications for its network. For miners, the halving event could lead to consolidation in their ranks, as individual miners and small companies leave the mining ecosystem or are acquired by larger players. While it is difficult to predict with certainty how the market will evolve after the halving, history shows us that this event usually has a lasting impact on the price and public and community awareness of Bitcoin.
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