“Bitcoin halving: the countdown to scarcity, igniting a new era of value.”
The crypto market will witness the historical Bitcoin halving event around 20th April 2024 and just a few days remain while writing this article. Current market conditions show price consolidation with Bitcoin facing resistance around $72,000 and bulls wrestling with Bears defending the lower price support of $69,000.
Since the start of April 2024, the market has witnessed a bearish correction of 20% and has not shown big moves or any significant news events. All these things are happening right before the Bitcoin Halving, indicating calm before the storm!
Bitcoin Halving occurs every 4 years and significantly impacts the crypto world by skyrocketing Bitcoin and Altcoin prices in the eventual long term. Right now, we will witness the fourth halving event. Every Bitcoin halving event pumped its price and climbed to its all-time highs of the 4-year cycle in a matter of just 300 days!
The question everyone has in mind right now is, “How much price will Bitcoin surge this halving?” Well, that remains an immediate mystery whose effect will be reflected in the next 300 days. I share my opinion through this article about Bitcoin halving.
About Bitcoin Blockchain:
Bitcoin is a digital asset or the world’s first cryptocurrency that was launched after the Global financial crisis of 2008. It is a digital currency similar to fiat currency (U.S. dollar, Indian Rupee, etc.) aimed to be an alternative payment currency operational across the globe ensuring borderless transaction of value, no central authority, and a completely transparent ledger system of transaction entries known to every person active on its network.
These principles are implemented through the use of blockchain. Bitcoin uses SHA-256 blockchain algorithm that ensures a secure system, decentralized economy, privacy and anonymity for investors, and hassle-free cross-border transactions.
Every transaction on the blockchain is stored in an encrypted form or a unique code, also known as a hash function (like a fingerprint). The hash code of a single transaction is linked to its previous transaction forming a chain thus creating a block that has its hash function, linked to its previous block, thus creating a chain. This blockchain activity and all transactions are stored on multiple nodes or devices active on the network.
This makes blockchain technology decentralized, eliminating the single-point vulnerability of failed or hacked servers, and is immutable to hackers as the computational power requirement for hacking is large and needed to hack all devices across the globe at once.
Blockchain system having separate storage across all active devices on its network, enables direct cross-border transactions from person to person, thus eliminating 3rd party facilitators (custodians, undertakers, etc) making it a self-sufficient system. This also ensures no central authority has control and all its transactions are known by every person.
Working of Bitcoin blockchain:
Bitcoin blockchain works on a Proof of Work mechanism (PoW) that has validators or miners who validate transactions happening on the Bitcoin blockchain. For millions of transactions across the globe at any point in time, it is vital to ensure the correct placement of transactions in the Bitcoin blockchain and avoid transaction mismatches, these miners use their powerful hardware to validate transactions and create a new block that solves this problem.
Validation of transactions is done and achieved using large machines that solve complicated maths problems and link transactions in order, creating a block. Every miner across the globe works on creating a new block and the miner whose new block is mined first is to be voted among all miners for majority consensus to be successfully placed in the Bitcoin blockchain.
After the block is placed in the blockchain, miners get new Bitcoin as a reward. These Bitcoins enter the market bringing in a fresh supply. There are only 21 million Bitcoins hard-coded to exist and the current market has approximately 18 million Bitcoins in circulation out of which 3 million Bitcoins have yet to be mined.
To create scarcity across the market and prevent all Bitcoins mined in a single year, its algorithm halves mining rewards every 4 years making it difficult to obtain new supply in the market. This makes Bitcoin a valuable storage unit and scarce like gold.
It’s Economic impact:
Bitcoin halving event decreases coin supply in the market and creates an eventual supply crunch to buy new Bitcoin. From the observations of the previous 3 halving events, Bitcoin’s first halving pumped its price enormously by 9000% during the first halving of 2012, 2900% during the second halving of 2016, and 800% during 3rd halving in a matter of 300 days!
This time things are different. Observations after each halving event show a shrinking rate of returns, and on that basis, the exact bullish price target is difficult to define. Maybe Bitcoin will climb above $1,00,000 or may consolidate for a longer time frame at existing price levels.
Big financial institutions and central governments are adopting cryptocurrency on a large scale and seeking to regulate the decentralized economy. They assert taxing crypto as their sovereign right over a decentralized asset that nobody owns. The world has begun to incorporate the crypto industry into daily applications.
From the macroeconomic perspective, crypto industry adoption is beneficial for every nation to progress and optimize its infrastructure and economy. It is getting streamlined and the world has begun to blend with the future of finance.
Final Line:
In conclusion, the Bitcoin halving event is a big deal in the world of cryptocurrency. It reduces the supply of new Bitcoins, which can make them more valuable over time. This could be a great opportunity for investors to make money, but it’s important to remember that investing always carries risks. Overall, the halving event is something to keep an eye on, as it could have a significant impact on the future of Bitcoin and the cryptocurrency market.
Thanks for reading the article, for more updates and insights, follow my profile by clicking the above link and clap for efforts below.
