The Bitcoin network completed its fourth “halving” by reducing the rewards earned by miners to 3.125 bitcoins from 6.25. The price of bitcoin has been volatile leading up to the event, with a 4% decrease this week, trading around $64,100 according to Coin Metrics. Following previous halvings, investors expect significant gains in the coming months.
Although the halving itself is not expected to have an immediate impact on the price of bitcoin, historical data shows that after the 2012, 2016, and 2020 halvings, the price of bitcoin increased by 93x, 30x, and 8x, respectively. This event serves as a significant test for mining companies.
JPMorgan analyst Reginald Smith highlighted the potential effects of the halving, stating that it would lead to a contraction in industry revenues and possibly spur consolidation and closures within the mining sector. Hash rates, which are crucial for processing transactions on the bitcoin network, will also be influenced by the halving.
Mining stocks have experienced volatility in the days leading up to the halving event, with many seeing double-digit declines for the year. For instance, Riot Platforms is down about 41% in 2024 after surging 356% in 2023. Analysts like Gautam Chhugani emphasize the significance of the halving in distinguishing winners in the mining industry.
Speculation around the event persists, with JPMorgan analyst Nikolaos Panigirtzoglou predicting a near-term decline in bitcoin’s price post-halving due to overbought conditions. Deutsche Bank analysts share a similar sentiment, suggesting that the halving event has already been priced in by the market.
Despite differing views on post-halving price movements, analysts like Marion Laboure from Deutsche Bank anticipate bitcoin prices to remain high. Factors such as future spot Ethereum ETF approvals, central bank rate cuts, and regulatory developments are expected to contribute to the cryptocurrency’s performance.
As of now, Bitcoin is trading at around $64,000, approximately 13% below its all-time high of $73,797.68 recorded on March 14.
Looking ahead, the market will continue to closely monitor and react to the outcomes of the recent halving event as the cryptocurrency landscape evolves.
