In April 2024, the crypto community will face Bitcoin halving. The itez editors decided to find out how BTC could react to the reduction in mining speed in the short and long term. Learn more about the “surprises” the halving 2024 may bring.
What is halving and why is everyone waiting for it?
Halving reduces crypto mining speed by half. The event is programmed to occur on the Bitcoin network every 210K mined blocks, that is, approximately once every four years.
Each halving causes BTC scarcity in the market, which pushes the cryptocurrency rate up. The easiest way to illustrate the effect of the event is to use a “rainbow chart.” It shows how each halving pushes Bitcoin to a new all-time high.
The vertical blue lines are halving dates, the black curve is the BTC rate, and the rainbow itself helps to understand whether a coin was cheap (blue area) or expensive (red area) at each time interval. Source: blockchaincenter
The crypto market has already experienced three halvings: in 2012, 2016, and 2020. Each time, BTC reached a new absolute maximum. This is the reason to believe that the 2024 halving will also launch a growth cycle for the cryptocurrency. Therefore, many participants in the crypto community strive to purchase BTC before it skyrockets, in order to lock in as much profit as possible.
Important! The market can face a correction after the Bitcoin halving in April 2024. The fact is that an event, as the history of observations shows, can become a “sell the news signal” , as investors believe that the cryptocurrency has reached a local maximum.
Read more about Bitcoin and the entire crypto market's reactions to halvings.
Why the 2024 Bitcoin halving is special
The effect of the 2024 halving may be brighter than previous ones due to the peculiarities of market conditions.
Let's take a look at the main factors that could make the 2024 Bitcoin halving effect different:
1. The spot Bitcoin ETFs effect. Members of the crypto community have been advocating for the launch of the tool in the United States for 13 years. The long-awaited launch of spot Bitcoin ETF trading in America took place in January 2024.
The tool has provided a simple way for large investors to profit from cryptocurrency price fluctuations without having to buy the coin directly. The growth of the weekly capital inflow into crypto funds up to a record $2.5 billion reflects the interest of market participants.
Spot Bitcoin ETF trading volume. Source: The Block
While investors pour money in spot Bitcoin ETFs, the tool's issuers are purchasing cryptocurrency. According to calculations by Cameron Winklevoss, co-founder of the Gemini crypto exchange, ETF issuers are buying 10 times more coins than inflows into the market. If ETF demand remains constant, issuers are going to purchase 20 times more Bitcoins than inflows after halving. The changes could significantly increase the shortage of cryptocurrency in the market. In this case, BTC will receive a powerful boost to growth.
2. Fed key rate-lowering expectations. The health of the crypto market largely depends on the American authorities' decisions, as the United States is the largest financial centre. Cryptocurrency behaviour is also influenced by the Fed’s interest rate steps. Rate hikes prompt economic participants to shift from spending to saving, with high-risk assets like cryptocurrency being the first to suffer.
Fed officials are hinting at a potential reduction in the key interest rate in 2024, which could support the growth of the digital asset market.
3. The likelihood of the Fed's new "printing". The US presidential elections will take place in the fall of 2024. Many in the crypto community believe that the new presidential administration will struggle with problems in the economy and may temporarily switch to a policy of quantitative easing, which involves the printing of new dollars. The initiation of the “printing press” is an excellent source of fuel for the crypto market. Some of the newly printed dollars may potentially flow into the crypto industry.
Earlier, we collected the Bitcoin forecast for 2024 in one review. Find out what levels BTC could reach this year.
Let's sum it up
In 2024, the halving "rocket," which should take Bitcoin to new absolute highs, will have as many as three additional “engines”: spot Bitcoin ETFs, the Fed’s likely move to lower the key rate, and the possible launch of the “printing press” in the United States.
Unfortunately, there is no 100% chance that any of these factors will work. However, even the presence of one additional “engine” could be enough for BTC to enhance the growth set by the halving. Therefore, the positive movement of Bitcoin in 2024 may pleasantly surprise market participants.
🤔 What do you think about halving?
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This article is not an investment recommendation. The financial transactions mentioned in the article are not a guide to action. Itez is not responsible for possible risks. The user should independently conduct an analysis on the basis of which it will be possible to draw conclusions and make decisions about making any operations with cryptocurrency.
