Bitcoin halving scheduled for this weekend – here’s how it will impact the crypto market

Regarding the halving event, specific calendar dates are not set in stone; however, it generally happens about every four years. Based on current projections, the upcoming halving is expected to occur either late Friday or early Saturday.

Also read: Bitcoin falls 8% in five days; here are 4 reasons behind the plunge

What is bitcoin halving?

The halving refers to an alteration in the foundational blockchain technology of Bitcoin, aimed at decreasing the pace of generating new bitcoins.

Since its creation by the pseudonymous figure Satoshi Nakamoto, Bitcoin has been structured to possess a finite supply of 21 million tokens.

This marks the fourth halving event in Bitcoin’s history. The initial halving in 2012 saw the reward drop from $50 to $25. The most recent halving will further reduce the reward to $3.125, equivalent to nearly $200,000 at current prices, with Bitcoin trading at $64,000 as of April 19.

The process of halving will persist until 2041, by which time all Bitcoins will have been mined. However, this particular Bitcoin halving event is anticipated to deviate from its predecessors due to recent geopolitical tensions between Iran and Israel, which have stirred market instability. Consequently, Bitcoin witnessed a significant downturn, plummeting to its lowest level in a month. On Friday, during the Asia session, Bitcoin experienced a decline exceeding 5.5%, falling to $59,961.

“In the long term, this supply reduction could attract more institutional and retail capital while amplifying Bitcoin’s stock-to-flow ratio. ZebPay is bullish about both the short-term as well as long-term outlook for Bitcoin and the wider crypto market,” said Rahul Pagidipati, CEO, ZebPay.

Also read: Bitcoin halving expected on April 20, here’s what it means; should you invest?

How bitcoin halving will impact the crypto market?

Experts say that the halving event might impact Bitcoin’s price as its heightened scarcity could result in upward pressure on prices and attract a wave of new investors to the cryptocurrency market.

Typically, Bitcoin experiences a significant rally approximately 60 days before the halving event. This has been observed consistently in the past cycles, including 2016 and 2020, where the cryptocurrency often reaches new all-time highs, according to experts

Following the rally, there is often a retrace period that tends to occur around 28 to 14 days before the halving. This pattern is highlighted in the 2020 cycle with a 19% retrace and in the 2016 cycle with a more pronounced retrace of up to 40% when accounting for downside wicks.

Rajagopal Menon, VP, WazirX, said, “After the halving, Bitcoin typically enters a phase of sideways movement, which can be termed as reaccumulation. This phase generally occurs at levels around old all-time highs, preparing the market for the next impulsive wave of price increases. Historical data shows that after the reaccumulation phase post-halving, Bitcoin tends to experience a parabolic rise in price. This pattern is evident in the discussions of post-2020 halving events, where a significant upward movement followed the halving and reaccumulation phases.”

Menon further added, “ The general consensus is that prices should go up because of the supply shock but geo political events such as the threat could cause the market to plunge as it did over last weekend.”

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Published: 19 Apr 2024, 10:09 PM IST