How the #bitcoinhalving Will Impact the Bitcoin Market?
There are many forces moving bitcoin, yet few attract the same level of attention as the halvings (when the block reward is cut in half). Historically, halvings have proven to be important catalysts for bull markets, and while the rate of impact is decreasing, the upcoming halving is likely to prove important for bitcoin’s price formation.
the bitcoin price is always determined by the net demand for holding bitcoin. With a given amount of bitcoin available at any point in time, its value must adjust until investors realize their desired allocations, denominated in e.g. USD.
To make a simplified example: If there was only one bitcoin and two investors wanted to hold 1000 USD worth of bitcoin each, that would only be possible with bitcoin valued at 2000 USD a coin and each investor holding half a coin each.
Against this backdrop, more and more people are learning about the halving and the scarcity of bitcoin and finding it appealing. That way the halving works as a Schelling Point, accelerating the already strong momentum for bitcoin. It is therefore not unlikely that we can see a pre halving pump, followed by a correction, before the underlying growth trend in adoption and awareness drives bitcoin towards new highs.
What should you do as an investor?
While speculators are likely going to position themselves in advance of the halving event, as they have in the past, long-term investors should pay minimal attention to the halving itself, and rather focus on the demand side of the market.
