There are 12 days and 14 hours left before Bitcoin halving! This countdown feels like a mysterious digital race. Does it make you excited? Don’t rush to take out the calendar to count the days, let’s talk about this hot topic right away! Just like the countdown before the New Year, every second is full of expectations and surprises. Bitcoin halving is like a feast in the digital world, which is irresistible.
You may have heard of Bitcoin, and the halving has attracted countless people's attention and speculation. This is not only a major event in the digital currency market, but also a grand gathering in the digital financial world. Just like waiting for the red envelope before the New Year, who doesn't want to know how many "surprises" there will be in it? Don't underestimate this countdown, it is far more than just a string of numbers. Bitcoin halving has always been a hot topic in the digital currency circle. Just like the suspense in the movie, every halving will set off a ripple. Just like waiting for the bell to go out of school when you were a child, every time it rings, it makes people feel itchy and look forward to the next surprise. So, what does Bitcoin halving mean? Is it a storm in the digital currency market? Or a feast of investment? Don't worry, let's unveil this mysterious veil together and see who is the end of this digital race!
Bitcoin halving, as the name implies, means that after a certain number of Bitcoins are mined, the number of Bitcoin rewards obtained from mining will be halved. This means that the issuance of Bitcoins will slow down and the supply of Bitcoins on the market will decrease. This process is stipulated by the Bitcoin source code. After every 210,000 blocks are generated, the Bitcoin mining reward will be halved once until the total amount of Bitcoins reaches 21 million. Currently, the Bitcoin mining reward is 6.25 Bitcoins, and before the halving, this number will be halved to 3.125 Bitcoins.
Regarding Bitcoin halving, people's attention is mainly focused on two aspects:
For miners, the halving means that the Bitcoin rewards they receive will be halved, which may affect their earnings and motivation to mine;
For investors, the halving could lead to a rise in the price of Bitcoin, as prices tend to rise when supply decreases and demand remains the same or increases.
In past Bitcoin halving events, we can see some interesting phenomena. First, before and after the halving, the price of Bitcoin tends to fluctuate, and sometimes even fall briefly. This is because some investors may take advantage of this opportunity to sell Bitcoin in order to make a profit. However, in general, the price of Bitcoin tends to rise after the halving, because the increase in demand caused by the reduction in supply will drive the price up.
Secondly, the Bitcoin halving will also affect the Bitcoin mining industry. Since the cost of mining may exceed the benefits of mining after the halving, some miners may be forced to stop mining, leading to adjustments and reorganization of the entire mining industry. At the same time, some more powerful mining companies may respond to the challenges brought by the halving by improving mining efficiency and reducing costs, thereby increasing their competitiveness.
In addition, the Bitcoin halving may also affect the Bitcoin trading market. Due to the reduction in the supply of Bitcoin, some trading platforms may experience a shortage of Bitcoin, resulting in fluctuations in trading prices and rising transaction costs. Therefore, when investors conduct Bitcoin transactions, they need to pay attention to market fluctuations and risks, and do a good job of risk management and asset allocation.
However, this BTC halving is different from previous ones.
The situation facing Bitcoin halving this time is unbearable to watch, because the output of Bitcoin has been diluted to the extreme. Before this halving, the price of Bitcoin had already hit a record high, and in the global macroeconomic environment, the Federal Reserve implemented an unprecedented interest rate hike and balance sheet reduction policy, adding uncertainty. At the same time, the approval of the spot ETF has also become the focus of market attention.
Although the correction after a big rally was not large, the consensus on Bitcoin is still very strong due to the strong support of ETFs and the continuous inflow of funds. However, most altcoins and meme coins have fallen into a technical bear market, and the sentiment of funds is relatively weak, and even the trend of Ethereum appears weak.
The reason for the divergence is very simple and clear. Without a comprehensive rate cut and money release by the Federal Reserve, other altcoins do not have sufficient liquidity support except for Bitcoin, which has ETF support. In addition, the large projects that are frequently launched on the market are also constantly sucking blood, bringing tens of billions of dollars in market value once they are launched, and the market funds are limited. Once the sentiment subsides, the callback will be relatively large.
As the scale of ETFs grows, the net inflow of funds that ETFs can attract will gradually slow down. Compared with the previous Grayscale Fund, which only allows inflows but not outflows, ETFs have on-site trading and redemption functions. Once they reach a certain scale, their attractiveness will be relatively saturated. Therefore, the FOMO sentiment of ETFs will gradually weaken and transform into a more long-term driving force for funds.
After the Bitcoin halving, its core driving force will be when the Federal Reserve will fully cut interest rates and release a large amount of money. The trigger for the recent market decline was that a member of the Federal Reserve said that there might be no need to cut interest rates in 2024. The market is often hyped by expectations. Everyone expects that there will be 3-5 interest rate cuts in 2024, but when this expectation is broken, market sentiment turns bearish.
Such high interest rates are extremely difficult for most companies in the United States, especially in terms of financing, and financial costs are rising. Although the U.S. stock market looks prosperous, it is actually mainly supported by artificial intelligence. The continued high interest rate will gradually increase the risk of the market. Historically, when interest rates remain high, the U.S. economy has almost always fallen into recession, and this economic recession may trigger a financial crisis, especially in the current situation of high debt in the United States. Once a financial crisis breaks out, it will be an unprecedented serious situation. Therefore, the market expects that if the Federal Reserve quickly cuts interest rates several times, it may be possible to achieve a soft landing or avoid landing before the recession. But if interest rate cuts are not taken or "hardened", it is likely to cause a recession. This is also the reason why the market was shaken after the speech of the hawkish members of the Federal Reserve, resulting in a significant decline in U.S. stocks.
However, from a data perspective, there is currently no sign of a recession or fundamental problems, so the market is unlikely to fall sharply in the short term and is more affected by sentiment.
The market is likely to continue to show a divergent trend in the coming period. Bitcoin may remain relatively stable due to the support of ETFs, but other altcoins will still face the challenge of insufficient funds in the market before the Fed's upcoming easing policy is determined. Therefore, unless you are doing short-term trading, the best strategy in the next few months is to wait patiently for opportunities and wait for panic selling in order to buy at the bottom.
In general, Bitcoin halving is an important event that will profoundly affect Bitcoin prices, the mining industry and the trading market, and have a significant impact on the entire digital currency ecosystem. Investors need to carefully study the dynamics and trends of the market and make wise investment decisions. At the same time, Bitcoin halving is also a test of the faith and value of digital currency. Only after the test of time can the long-term value and potential of Bitcoin be proven.
That’s all for today’s article. We are currently in a bull market, and things are surging. We have Mima sharing with us every day.
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