The years-awaited approval of the spot Bitcoin Exchange-traded Funds (ETFs) by the SEC, which kept a dozen companies reviewing their submissions and investors reconsidering their portfolio management strategies, has finally arrived, together with more positive impacts than predicted. The harbinger crypto, which rose by no less than 300% over time and captured the attention and money of colossal institutional investors and whales, saw gains that made the dreams of the most optimistic investors turn into reality.
Bitcoin has grown by over 40% since the BTC ETFs received the O.K. and started being offered to the public by the issuing companies, including Grayscale, Fidelity, VanEck, and so on. Furthermore, it’s secured a new price peak as investors squashed to buy Bitcoin, which has never been seized before. After it breached the $70K threshold, all eyes were monitoring its upsurge to a potential $75K. While this price point is expected to be reached sooner rather than later, an upcoming, stellar event that marked the fourth month of the year could have a significant impact on how the asset’s price behaves.
The halving, also known as the slashing of the bitcoins received by miners for working their CPUs, is bound to be an impactful event in the cryptosphere. The main questions regard its potential to drive the asset’s price even higher, as history has accommodated us. So, can the halving be as favorable as the ETF approval? May it build on or break the fertile ground Bitcoin is enrooted in after the SEC’s long-awaited green light?
First, let’s look into the Bitcoin halving behind the hype
Expectedly, many rookies are finally transforming their dreams of getting into Bitcoin into reality, thanks to the heightened exposure, easier access, and decenter costs generated by the approval and launch of BTC ETFs, offering exchange-traded products to the broader public. As the asset’s prices have risen considerably ever since, it’s high time we dug into the next upcoming and most impactful event on Bitcoin’s agenda—the halving.
You can be a fresh entrant or not; chances are that you’ve heard this concept tossed around at some point, but found it challenging to understand exactly where all the hype is coming from. Investors tend to get into the Bitcoin frenzy once a new halving is approaching, for they happen once every four years, launch to reduce inflationary pressure as the protocol has intended, and put some hardware on idle for a while.
Are value gains a possibility, or a probability?
Historically, price gains followed the past three halvings, creating a pattern that more or less investors base their current investment decisions on. This can be understood as a reward reduction taking place when the total number of blocks hits a specific threshold, which is momentarily established at 210K blocks, in order to ensure the asset’s scarcity. The process will ultimately lead to a total of 21M bitcoins launched, after which no coin will be re-released.
The prevailing consensus is that this event is advantageous for the asset’s worth, leading to heightened attention as analysts track the influx of BTC into investors’ wallets. However, Bitcoin’s value continues to be impacted by a complex range of factors, such as adoption rates, regulations, technological advancements, macroeconomic conditions, and the list can go on. While BTC halvings have generally brought about price increases, these gains have gradually lowered over time, as they were supposed to.
Despite potential price upsurges, increases could be lower
Looking at the different charts comparing the distributions of assets, rewards, and price gains over time, one can only conclude that the return distribution has lowered as the BTC market has grown. The asset’s development has been noticed in the diminishment of both volatility and returns over every witnessed halving. At the same time, the constancy of the return/volatility ratio kept increasing after the first halving.
Such progress indicates that crypto enthusiasts should better keep their expectations under control and realistic, for similar stellar price increases may remain a thing of the past, enrooted in an era where Bitcoin was less mature.
The bullishness in the months prior to the halving to be fair-minded
There’s a widespread theory according to which the primary crypto tends to reach humble, depressing levels in 12 to 16 months, leading to the halving, chalking up gains well into the event. Furthermore, well-educated traders know that the past three cycles surrounding the reward-mining had values gained over 30% in the two months prior to the event. This result cuts the supply growth pace in half. Hence, the halving of this April will turn the reward gained per block to 3.125BTC from 6.25BTC. If history repeats itself, Bitcoin could see its price trading near its ATH of $72K, specifically around April 17—the day set for the halving.
The bullishness exhibited before a halving could be full of common sense, for this year has already witnessed plenty of positive events for Bitcoin that fueled optimism in the market. Investors are forgetting the black days encountered not long ago in the cryptoverse as the leading asset in terms of market cap reapproaches its heyday, taking the rest of its competitors up with it, including Ethereum and BNB.
A word of caution
The worldwide financial market has come a long way ever since the first digital, blockchain-based coin broke in and transformed the cypherpunk’s dream into a scarce, actual store of value. Now, crypto enthusiasts can invest in regulated derivative markets and spot exchange-traded funds, with chances being that Ethereum could gain just as much exposure and appeal as Bitcoin in the following months, prior to and after a favorable announcement from the SEC.
This being said, through continuous market cycles, as well as enlarging market caps, Bitcoin’s volatility has gradually gone down. As such, it’s wise to say that moderated expectations will keep investors prepared for whatever the future is cooking in the oven for Bitcoin, for the owners of the asset today differ a lot from the BTC possessors 14 years ago.
