On April 20th the bitcoin halving will take place, which is set in the cryptocurrency’s technology to cut the rate at which bitcoin is created. The event happens every leap year and is eagerly anticipated by crypto enthusiasts.
The halving is intended the underscore the value of bitcoin by capping its supply and increasing its worth. It was a process developed by bitcoin creator Satoshi Nakamoto, who has since disappeared. The halving will take place after bitcoin’s all time high price of $73,803 in March this year, and subsequent drop in the last few weeks.
In the past, the bitcoin halving process has increased the price of the cryptocurrency, the price of bitcoin has increased by an average of 16% in the two months to follow the halvings in 2020, 2016, and 2012.
A note from Goldman Sachs to their clients warned against a bitcoin price drop according to CoinDesk: “Historically, the previous three halvings have been accompanied by BTC price appreciation after the halving, although the time it took to reach the all-time highs differs significantly. Caution should be taken against extrapolating the past cycles and the impact of halving, given the respective prevailing macro conditions.”
JPMorgan analysts also predict a price drop after the halving, citing “overbought conditions”.
Duncan Ash, head of strategy at Coincover, commented: “In the short term, the upcoming halving will put supply and demand slightly out of kilter, driving market pressure as more investors seek to get a piece of the pie. This is likely to continue until the elevated price deters new investors, which will restore a closer balance between the number of buyers and sellers and settle the market. In addition, the industry will emerge with more users, a higher market cap, and greater liquidity. As such, we’re likely to see a stabilising effect on the market in the mid to long term.”
This year the US Securities and Exchange Commission gave bitcoin the all-clear for ETF assets to be bought and shared to track the price of bitcoin.