The next Bitcoin halving will occur in mid-to-late April 2024 and will continue about every four years until the last BTC is mined. Around 2140, the network will no longer produce new coins. The halving is a mechanism to counteract inflation by maintaining scarcity; the rate at which new tokens are created decreases by half, lowering the block reward. As a rule, there’s an increase in volatility when Bitcoin halves, which raises the value of the cryptocurrency, but past performance isn’t a good indicator of future results. Indeed, the Bitcoin halving generates excitement, so it’s important to separate the facts from the myths.
There are several inaccuracies regarding the Bitcoin halving, many of which cause investors to make bad decisions. Here’s the truth.
The Bitcoin Halving Will Create Overnight Millionaires
Even if the halving will have a major impact on the price of Bitcoin, don’t expect it to skyrocket overnight. In the meantime, learn how to buy Bitcoin. If you subscribe to the hypothesis that Bitcoin will break its all-time high of roughly $69,000, this is exactly what you expect.
Nevertheless, halving events aren’t the only determinant of the cryptocurrency’s price trajectory. The impact on value can be influenced by many factors, such as supply and demand, forks, competition, and regulations, to name a few. The halving is responsible for some upward price movements, but there’s no guarantee whatsoever BTC’s price will double or quadruple overnight.
Bitcoin has rallied three times after halving events, but that doesn’t necessarily mean it will happen again. Additionally, the magnitude of these halvings increases may lessen with each subsequent halving, so expecting similar performance is unreasonable. It’s a good idea to follow the prevailing trend before and after the halving, executing trades in the belief that prices will rise or fall. Stay on top of news platforms, subscribe to newsletters, and join relevant online communities to make informed decisions. You must refrain from panic buying, FOMO, and even panic selling. The idea is to hedge losses and maximize returns.
Halving Effects Are Already Reflected in Bitcoin’s Current Price
It’s largely believed the Bitcoin halving is already priced in – in other words, the effects are reflected in its current price range ($50,000-$52,000), and the event won’t affect the cryptocurrency’s value.
The complexity of the cryptocurrency market dynamics and external factors (oil price, the NASDAQ index, gold prices, etc.) indicate that the halving can’t be accounted for ahead of schedule. BTC isn’t a traditional financial asset; neither does it represent equity like stocks (or provide yields like bonds), so pricing in the halving is unfeasible. Waarde Bitcoin (Bitcoin’s value) cannot be decisively predicted, as it depends on various factors, including the number of investors.
The Security of The Bitcoin Network Will Drop
Mining is a paramount activity on the Bitcoin network, as it maintains the integrity of the blockchain, i.e., the ledger of transactions upon which it’s based. The hashrate is the measure of computational power used in mining; it involves multiple calculations per second. As it increases, it becomes more difficult for threat actors to infiltrate. One of the most important incentives for BTC miners is the block reward, which is granted for contributing to network security. As we all know, the halving reduces the rewards paid and given to miners for validating transactions and creating new blocks on the blockchain, so there’s fear it will cause a decrease in network security.
There’s no denying that Bitcoin’s security depends on computational power, but it also benefits from its decentralized nature and distributed consensus algorithm. The halving event reduces the immediate incentive for mining. Still, there’s potential for price appreciation post-halving, so the outlook looks beneficial for BTC miners. The crucial event that occurs every 210,000 blocks draws the attention of existing and prospective miners, so more individuals and organizations could take part in mining activities, therefore strengthening security. Block rewards are getting smaller, but transaction fees are more than enough to encourage Bitcoin mining.
After The Bitcoin Halving, There Will Be a Miner Exodus
There will be a 50% reduction in the reward Bitcoin miners receive for validating transactions and adding the next block to the blockchain. Miners will get 3.125 BTC, half of the current reward, which can decrease selling pressure as miners struggle to adjust their operations to maintain profitability. One common myth people believe in is that Bitcoin halving will cause a miner departure, as it will impact the profitability of many validators. It’s shrouded in misunderstanding and fear. Why is it an error? For starters, Bitcoin’s protocol features an automatic difficulty adjustment mechanism that counteracts hash rate fluctuations, preventing the death spiral scenario.
Bitcoin mining will become easier for those who remain, balancing the system. The self-regulation in the blockchain ecosystem ensures that network collapse is impossible, so it doesn’t matter how many validators enter and exit the network. The Bitcoin mining landscape includes institutional miners and long-term players unlikely to be deterred by short-term price fluctuations. Mining companies have increased their hardware acquisitions to welcome the halving with increased efficiency, while BTC miners are liquidating their inventories to address costs and leverage low ASIC prices.
The Bitcoin Halving Is an Effective Manipulation Technique
There’s an outrageous theory that the price of Bitcoin is being propped up with the help of the halving. To be more precise, the halving event causes substantial disturbances in the cryptocurrency market by directly influencing the price of BTC and misinforming other market participants. Nothing could be further from the truth. The halving is a predetermined feature of Bitcoin’s algorithm, designed to keep inflation low and maintain the value of the cryptocurrency over time. The event is backed into its code. As mentioned earlier, Bitcoin halvings don’t guarantee a price increase. Litecoin, for instance, undergoes halvings but doesn’t experience a price increase.
Wrapping It Up
Misapprehensions regarding Bitcoin halvings must be addressed right away. If the experts don’t do their fair share of debunking myths, there’s a risk that investors (and miners) will make misinformed important decisions.
