Bitcoin enthusiasts eagerly anticipated the occurrence of bitcoin’s ‘halving’ on Friday, a pivotal event in the cryptocurrency’s protocol aimed at reducing the rate of new bitcoin creation. Programmed into Bitcoin’s code by its pseudonymous creator Satoshi Nakamoto at its inception, the halving occurs approximately every four years.
Chris Gannatti, Global Head of Research at asset manager WisdomTree, which offers bitcoin exchange-traded funds, described the halving as “one of the biggest events in crypto this year.” CoinGecko’s countdown clock indicated that the halving was slated to take place in the early hours of Saturday GMT.
For many cryptocurrency enthusiasts, the halving underscores bitcoin’s value as an increasingly scarce asset, as Nakamoto set a limit of 21 million tokens. Conversely, skeptics view it merely as a technical adjustment hyped by speculators to inflate the virtual currency’s price.
The mechanics of the halving involve reducing the rewards miners receive for creating new tokens, thereby increasing the cost of introducing new bitcoins into circulation. This comes following bitcoin’s surge to an all-time high of $73,803.25 in March, with the cryptocurrency trading at $63,800 on Thursday.
Bitcoin and other cryptocurrencies have benefited from excitement surrounding the U.S. Securities and Exchange Commission’s approval of spot bitcoin exchange-traded funds in January, as well as anticipation of central bank interest rate cuts. Previous halvings occurred in 2012, 2016, and 2020, with some cryptocurrency enthusiasts pointing to subsequent price rallies as indicative of potential price increases post-halving. However, many analysts remain skeptical.
“We do not anticipate bitcoin price increases post halving as it has already been priced in,” wrote JP Morgan analysts this week. They predict a decline in bitcoin’s price post-halving due to being “overbought,” coupled with subdued venture capital funding for the crypto industry this year.
Source: reuters.com
