What to expect for the price of Bitcoin with the upcoming halving?
The hottest topic in the crypto universe right now - and one that you are most likely already aware of - is the Bitcoin halving, which is about to happen in the next few days.
There is not exactly a set date for this, but it is expected to happen around April 20th.
The big million-dollar question (or dozens of Bitcoins) is: what can we expect for the price of classic virtual gold from this change?
First of all: what exactly is halving?
Yes, the topic is hot, but we can start in a more rational way, assuming that you may not know what that means.
Halving is nothing more than the moment of change in the remuneration of Bitcoin issuance blocks. In addition to the technical aspects that come from the original project of what is the biggest crypto of all to date, three points are relevant when it comes to the halving itself:
It happens every 210,000 blocks mined;
Remuneration for miners drops by half when a halving takes place; It is;
Most likely, neither you who read these lines nor I who write them will see the last halving happen.
Regarding the first point, this is a technicality that, as already said, was defined in the original project and is related to the maximum number of Bitcoins that exist and will be mined - 21 million, which guarantees the scarcity of the asset, thus like gold, for example.
The second aspect talks about the incentive that exists for network points to continue mining: even with the reward falling (from 6.25 BTC to 3.125 BTC), the unit value of Bitcoin has risen considerably since the last halving in 2020 (from US $10,000 to $70,000 at the most up-to-date quote). Miners do this calculation to assess whether it is worth continuing in the ecosystem.
The third item, about none of us seeing the last halving becoming a reality, has to do with the expectation of when it should occur: taking into account that, with current computational capacity, a halving is expected to occur every approximately four years, the last occurrence is only expected for the year 2140, until we reach 21 million Bitcoin units to be issued.
A big factor that should boost post-halving prices
In recent months, with the SEC hacking Twitter (or
To give you an idea, when there was real authorization from the SEC, we started to have more than ten ETFs of this type - today we have exactly eleven. The value under management (which you can find under the acronym AUM, for Assets Under Management) of these ETFs, which in January did not reach US$20 billion, today approaches US$60 billion.
And there is a reason to think that this is just the beginning: the entry of retail more vigorously into the field of buyers. This factor is explained by two factors: the history of crypto purchases comparing institutional and retail investors and also a relevant regulatory factor that exists in large American financial institutions.
The first point: the vast majority of those who buy cryptos are retail. Institutional investors participate in the market by offering - and serving as a platform - rather than necessarily owning these assets.
More relevant than that is the second: according to some rules in the USA, financial institutions can only offer clients ETFs that have been in existence for at least 90 days - so, for example, they can check the quality of these items before placing them on the customers' shelves and allowing them to invest in these possibilities.
And, here's the big coincidence: these ETFs are closing 90 now between April and May 2024.
Why can this “retail factor” drive demand?
Maybe you don't understand the gain of having a Bitcoin ETF offered by a more traditional American financial institution, but let's think of an easier example.
Think of a person with a more averse profile for new investments. And on the contrary, what we mean is: the person can even risk putting money into something new and not even be so scared of risk and volatility, but they only do this if they don't have a lot of work to put the money to work.
This is the type of person who just hasn't invested in certain assets because they don't know how to do it.
Now think about that same person receiving notification from the financial institution they have had an account with for many years. The potential for new investors who can simply enter this market because “it’s now simpler” is immense.
What does this “retail factor” have to do with the halving?
Someone might have thought that if “incentives get smaller for those who participate in Bitcoin mining with each halving, then mining should fall.”
Well, whether that will happen is another 500, but the main information that is relevant about this is the following: as efforts to mine new blocks will be less rewarded, it will become a little more difficult (and competitive) to obtain new units of Bitcoin.
Or, in much more direct terms: at the same time that there are Bitcoin ETFs that will be offered to clients with a greater propensity to buy them in the USA (which is a super relevant market for the crypto universe), we have a slightly greater difficulty (with this incentive reduced with each new mining block) to obtain new units. Demand will increase and supply will gradually stabilize.
The upward movement in the price of Bitcoin was already observed last year and continues this year.
If you already have some knowledge of the most undoubted economic law that exists - that of supply and demand, - you already understand the size of the potential that this brings.
We are not ones to set prices, but the fundamentals of this combination between a potentially much greater demand and a supply that will be a little more complicated to obtain suggest that the Bitcoin price still has a relevant range to rise.
If you understand the scenario described and agree with it, it's worth taking a ride!
