The next bitcoin halving is expected to take place in May 2024. From that moment on, the reward miners receive for producing a block on the blockchain will be half what it is now. The mining hosting provider Blockware explains in an analysis what we can expect.
Halving good for bitcoin price
On the social media platform X (formerly Twitter), Blockware describes that every halving is very beneficial for the Bitcoin price. Next year, 164,250 fewer BTC are expected to be mined – more than MicroStrategy’s entire Bitcoin hoard.
With the new supply literally being cut in half, the main remaining variable is the market price. Judging by the past, the demand after a halving is indeed increasing – eventually, investors will understand that the supply will decrease after this event.
🚨How #Bitcoin may reach $400,000 in the next halving period🚨
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“Analyzing the 2024 Halving: Understanding Market Cycles and Opportunities Created by the Halving”
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Unlike other commodities, Bitcoin has a predetermined… pic.twitter.com/YegdoSCbPP
— Blockware Solutions (@BlockwareTeam) August 18, 2023
At least as importantly, the halving benefits limited supply due to the presence of miners. They have to sell their coins to stay functional. However, if fewer tokens need to be sold, the price will eventually have to increase to justify competition from miners.
Blockware assumes that this will initially cause the price to drop and some miners will have to sell. This idea is shared by analysts at JP Morgan, among others, who believe that many miners will have a very hard time as a result of the halving.
But once the weakest miners have outperformed the competition, there is less selling pressure on the remaining parties. There is less competition, which makes mining easier.
Bitcoin same market value as gold?
The mining company also believes the expectation that Bitcoin (BTC) will continue to yield diminishing returns is wrong. It is not the market value that determines what happens to the price, but what can be traded on exchanges. Now it seems that this proportion of the total outstanding tokens is getting smaller and smaller. This means that volatility could increase again.
A top of $400,000 in the next bull market would break the trend of lower yields seen in recent years. This would also mean that the total market value of Bitcoin would then be just below the current market value of gold. Of course, we have to start from the current price of gold. Still, the current market value of gold is not bad; it is estimated at US$12.7 trillion.