On May 12, 2024, Bitcoin experienced a significant event known as the halving. This event occurs approximately every four years and aims to limit the total supply of Bitcoin to 21 million by 2140.
Mechanism of the Halving
During the halving, the reward given to Bitcoin miners for verifying transactions is reduced by 50%. This reduction in rewards effectively decreases the number of new Bitcoins entering the market. The halving mechanism is inherent to Bitcoin’s code, ensuring its gradual supply limitation.
Market Reaction
At the time of the halving, Bitcoin’s price remained relatively stable, indicating that the event had been anticipated by investors. However, previous halvings have historically been followed by substantial price increases. In 2020, Bitcoin’s price surged from approximately $8,600 to over $56,000 within a year after the halving.
Expert Perspectives
Despite the historical trends, crypto expert Andrew O’Neill from S&P Global expressed caution regarding using previous halvings to predict future price movements. He emphasized that numerous factors influence Bitcoin’s price, and the halving is just one of them.
Historical Context
Prior to this halving, Bitcoin had undergone three previous halving events: in 2012, 2016, and 2020. These events have contributed to Bitcoin’s reputation as a volatile asset with significant price fluctuations.
Current Bitcoin Supply
Following the halving, over 19.5 million Bitcoins have been mined, leaving approximately 1.5 million still to be mined within the next 116 years. The halving event occurs every 210,000 blocks mined, which typically corresponds to a four-year interval.
Mainstream Perception
Traditional financial institutions have historically viewed Bitcoin as a high-risk asset due to its price volatility. Bank of England Governor Andrew Bailey has cautioned investors about the potential for significant losses when investing in cryptocurrencies. However, Bitcoin’s legitimacy received a boost in January 2024 with the approval of ETFs holding Bitcoin on the US stock exchange.
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News pulse: 8 bits out of 10
- Significance of the news: 8/10. The halving is a significant event for the cryptocurrency market as it reduces the supply of new Bitcoin entering the market by 50%, potentially impacting the price.
- Innovative value of news: 7/10. The halving is not a new concept and has been a part of Bitcoin’s code since its inception, but it is still an important event for the market.
- Potential impact of the news on the market: 8/10. The halving could potentially lead to an increase in the price of Bitcoin, as it reduces the supply of new coins available and increases scarcity.
- Relevance of the news: 9/10. The halving is a highly anticipated event in the cryptocurrency market and is relevant to anyone invested in or interested in the space.
- Reliability of the news: 9/10. The news is reported by Sky News, a reputable and reliable news source, and includes quotes from experts and analysts.
- The general tone of the news: 7/10. The tone of the news is generally positive, highlighting the potential impact of the halving on the price of Bitcoin, while also acknowledging some skepticism from experts.