Bitcoin (BTC) owners around the world are looking forward to a crucial date in April when the long-awaited Bitcoin halving will take place. This halving of the Bitcoin mining reward has resulted in significant price increases in the past. The most important question now is whether this will be the case again this time.
The impact of previous Bitcoin halvings
The halving, which is still about 52 days away, occurs roughly every four years. This means a reduction in the reward for miners from 6.25 Bitcoin per block mined to 3.125 Bitcoin per block. At the same time, the total supply of Bitcoins on the market will never reach more than 21 million, creating a shortage. According to economic fundamentals, this should drive up the price.
This event has happened several times and resulted in significant price increases. During the previous halvings in 2012, 2016, and 2020, we saw increases of 11,000 percent, 3,000 percent, and 700 percent, respectively. Certainly not unpleasant, especially for the passive investor.
Expert Jan Robert Schutte, founder of the Crypto Academy, explains:
“What is striking is that the remuneration continues to fall and the price keeps falling after the first increase. So far, the halving has not proven to be a guarantee that the price will continue to rise. It’s not a straight path to the top.”
Despite these historical trends, Schutte warns against blindly trusting that prices will continue to rise. Halving alone does not guarantee further growth as the market is also influenced by external factors. This was also evident today when the crypto exchange Coinbase briefly failed after a recent price increase. But how is it possible for the price to skyrocket months before the halving?
“There is a lot of speculation that the halving will have an impact. However, the price of Bitcoin is increasingly moving in parallel with the stock markets,” notes Schutte.
The Bitcoin halving is considered a milestone in the crypto world and has implications beyond just the Bitcoin price. In doing so, it underlines the decentralized nature of Bitcoin and emphasizes the importance of scarcity in a world where traditional currencies are often vulnerable to inflation. The question remains whether it can generate several hundred percent returns in this cycle.
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