Today, Bitcoin is the largest digital currency by market capitalization in the world, because it has many distinctive characteristics, on top of which is its deflationary design as a result of what is known as "halving".
Bitcoin's "halving" is essentially the systematic and algorithmic decline in the Bitcoin block reward, meaning that the rewards miners receive for block validation are reduced by 50% every 210,<> blocks using specialized energy-intensive computers.
The next halving, scheduled for April 2024, will cut miners' profits to 3.125 bitcoins per block (about $94,6) compared to the current 25.189 bitcoins, or about $<>,<>.
Bloomberg published a report written by David Pan in which he talked about the impact of "bitcoin halving" on cryptocurrency markets, and the writer said that this once-in-4-year event can have a significant impact on the price of the largest cryptocurrency and at the same time threaten the bitcoin mineral.
The writer points out that the first halving operation took place in 2012, the second operation in 2016 and the third operation in 2019, and the fourth operation is expected to be next April.
Logically, the incentive to mine Bitcoin will decrease when each "halving" is completed, and the event is also associated with huge increases in the price of Bitcoin, and historically the "halving" in the previous three times was accompanied by a jump in the price of Bitcoin by large percentages estimated at 8450% in 2012, 290% in 2016 and 560% in 2019. After the next halving, the cost of producing Bitcoin is expected to reach about $40,<>.
Clear vision
On the other hand, a report by CoinBase, the largest cryptocurrency exchange in America, said that the impact of the upcoming "Bitcoin halving" remains unclear, as many external factors play important roles in market behavior.
The report pointed out that although many experts look positively at the halving event because they believe that it enhances the potential scarcity of bitcoin, and supports the dynamics of supply and demand, it is difficult to get a clear picture of the market's reaction to the price movement, because this requires deciphering the effects of dollar movements, interest rates and global liquidity.
Monitoring the impact of global liquidity would reveal a clear picture of an asset's performance within different economic systems, because the cryptocurrency market tracks global liquidity movements from the unfavorable market events that occurred in May to June 2022.
The author believes that it is possible that the next halving of Bitcoin in the second quarter of 2024 will have a positive impact on the performance of the world's most famous cryptocurrency. However, the evidence supporting this relationship remains largely speculative.
Currently, the price of Bitcoin hovers at $30,309. The digital currency has seen a rise of 83% since the beginning of the year, but it is still well below its record high of about $69,2021 in November <>.
Bitcoin's recent jump coincided with applications to establish Bitcoin ETFs in the United States, including a request from Black Rock, which has an exemplary track record of obtaining approvals to establish ETFs.