The change in Bitcoin‘s underlying network is imminent, and it will change the cryptocurrency’s functioning forever. Some analysts predict that this will also have a major impact on the future price trajectory.
Bitcoin halving, as it is known, will halve the number of new Bitcoins created through crypto mining. This reduction in supply was directly coded into Bitcoin at its inception in 2009 and occurs roughly every 4 years.
After the last halving in 2020, there was a 5-fold increase in the price of Bitcoin. This increase followed the pattern of record-breaking rallies after each previous halving.
Danny Scott, CEO of crypto platform CoinCorner, told The Independent, “History doesn’t repeat itself, it rhymes. So while the details, circumstances and environments will change, there will still be a lot of similarities,” he told The Independent.
Most people outside the Bitcoin world don’t understand what a halving is or the role it plays. The halving naturally drives the price up due to supply and demand in a medium to long-term outlook, which brings in new people as the price surpasses previous all-time highs. So it indirectly plays a big role in shaping investor sentiment and market speculation.
Scheduled for Friday, April 19, the latest Bitcoin halving comes at a time when the crypto market is already vibrant, having hit an all-time high in March.
In January, the US Securities and Exchange Commission (SEC) approved the first Bitcoin spot exchange-traded funds (ETFs), bringing billions of dollars worth of institutional investment into the market for the first time. This surge in demand, coupled with the impending reduction in supply, has led some analysts to believe that Bitcoin could reach new highs in the coming months.
Kadan Stadelmann, chief technology officer at blockchain firm Komodo Platform, told The Independent, “Historically, the value of Bitcoin has increased after each halving event. Given the high institutional interest, this trend is likely to continue during the current market cycle.”
Ramani Ramachandran, CEO of Router Protocol, added:
Institutional demand will be really present during this halving and it already looks like it could outpace the huge retail demand seen after every previous halving. The combination of these two forces will be extremely interesting to watch.
In a recent survey of institutional investors and asset managers, 69 percent of respondents think Bitcoin’s halving will increase investment in the cryptocurrency. Only 2 percent of respondents said they thought it would lead to a decrease in investments.
Research from digital asset management firm Nickel has revealed that other cryptocurrencies will also benefit from the halving and that increased interest in the crypto space will boost the likes of Ethereum (ETH).
