cryptocurrency market They were looking forward to Bitcoin's “halving'' on Friday. This is a change to the cryptocurrency's underlying technology designed to reduce the rate at which new Bitcoins are created.
Halvings, which occur approximately every four years, were originally written into Bitcoin's code by pseudonymous creator Satoshi Nakamoto as a way to slow down the rate of Bitcoin creation.
Chris Ganatti, global head of research at WisdomTree, an asset management company that sells Bitcoin exchange-traded funds, called the halving “one of the biggest events in the crypto industry this year.”
According to CoinGecko’s countdown clock, the halving is scheduled to occur in the early hours of SAST on Saturday.
For some crypto enthusiasts, the halving will emphasize Bitcoin's value as an increasingly rare commodity – Nakamoto has capped Bitcoin's supply at 21 million tokens – while Skeptics see halving as nothing more than a technical change talked about by speculators to drive up the price of cryptocurrencies.
This halving works by halving the rewards that crypto miners receive for creating new tokens, making it more expensive to put new Bitcoin into circulation.
This comes after the price of Bitcoin rose to an all-time high of $73,803.25 in March, spending most of 2023 slowly recovering from the dramatic sell-off in 2022. On Thursday, the world's largest cryptocurrency was trading at $64,600.
Read: Bitcoin bubble story gets bigger
Bitcoin and other cryptocurrencies are being buoyed by excitement over the U.S. Securities and Exchange Commission's decision to approve a Spot Bitcoin exchange-traded fund in January and expectations that central banks will cut interest rates.
price increase
Previous halvings occurred in 2012, 2016, and 2020. Some crypto enthusiasts have pointed to the price increase following the halving as a sign that Bitcoin's next halving will push up prices, but many analysts are skeptical.
Analysts at JPMorgan said this week: “We don't expect Bitcoin prices to rise after the halving, as it's already priced in.” They expect the price of Bitcoin to fall after the halving. That's because Bitcoin is “overbought” and venture capital funding to the crypto industry has been “subdued” this year.
Financial regulators have long warned that Bitcoin is a high-risk asset with limited real-world applications, but there is a growing movement to approve trading products linked to Bitcoin.
Andrew O'Neill, a cryptocurrency analyst at S&P Global, said he is “somewhat skeptical” about the lessons learned from past halvings in terms of price prediction. “It's just one factor among many that drives the price.”
Bitcoin has struggled for direction since its all-time high in March, with geopolitical tensions and expectations that central banks will continue to raise interest rates amid lingering turmoil in global markets. It fell within the week. — Elizabeth Howcroft, (c) 2024 Reuters
