April 2024 - The Halving...
Posted: October 15th, 2023, 7:29 am
An interesting article below discussing the four-year Bitcoin-generation halving cycle, with the next halving-episode occurring in April 2024.
This four-year cycle halves the number of Bitcoins given as a reward to successful miners -
The million-dollar question for crypto investors is whether crypto prices will go up after the next bitcoin halving.
“There are a lot of factors that could come together at the same time next year to create a perfect storm,” Simon Peters from the investment platform eToro said. “Central banks have been raising interest rates to bring inflation down to target levels. But in the future they may not be as tight with monetary policy, which could be positive for asset prices, crypto included.”
Not everyone is convinced, however. “I wouldn’t suggest anyone counts their chickens before they’re hatched,” Laith Khalaf from the investment platform AJ Bell said.
“The halving only affects new supply rather than overall supply, so while fewer new bitcoins will be mined, the stock of existing bitcoins out there remains. It’s not as if the halving comes out of the blue either and so should largely be reflected in current prices.”
Experts also point out that the macroeconomic conditions are different from when previous halvings happened. In 2020 the pandemic meant that boredom and spare cash that couldn’t be spent on travel or socialising were fuelling investment in cryptocurrencies.
Now higher interest rates mean that household budgets are increasingly squeezed and people have less money to spend on speculative investments.
“Is there any point where crypto enthusiasts don’t predict a bull market and stratospheric price rises?” said Ben Yearsley from Shore Financial Planning. “Crypto has previously been around in a zero interest rate environment where there was no cost to holding assets that did not yield anything. Today you can get nearly 6 per cent interest on cash. Different environments lead to different outcomes.”
Concerns also remain about the long-term use of bitcoin. A survey of crypto users by Deutsche Bank found that the proportion of respondents who viewed cryptocurrency as a fad that will fade had doubled from 9 per cent in December 2021 to 18 per cent in September.
“Bitcoin remains pretty economically inert in the real economy, and that suggests the entire project may be doomed to failure. It wouldn’t hugely surprise me if bitcoin hit $50,000 or $1 next year,” Khalaf said.
https://archive.ph/QRw85
I suspect that Crypto-enthusiasts tend to seek to overplay the price-related importance of such highly-telegraphed technical cycles such as this, and that in the past, they've relied on unrelated external macro events that have sometimes aligned with these post-halving periods, and which have subsequently gone on to have much more influence on the price of Bitcoin that these four-yearly halving cycles themselves.
Cheers,
Itsallaguess
An interesting article below discussing the four-year Bitcoin-generation halving cycle, with the next halving-episode occurring in April 2024.
This four-year cycle halves the number of Bitcoins given as a reward to successful miners -
The million-dollar question for crypto investors is whether crypto prices will go up after the next bitcoin halving.
“There are a lot of factors that could come together at the same time next year to create a perfect storm,” Simon Peters from the investment platform eToro said. “Central banks have been raising interest rates to bring inflation down to target levels. But in the future they may not be as tight with monetary policy, which could be positive for asset prices, crypto included.”
Not everyone is convinced, however. “I wouldn’t suggest anyone counts their chickens before they’re hatched,” Laith Khalaf from the investment platform AJ Bell said.
“The halving only affects new supply rather than overall supply, so while fewer new bitcoins will be mined, the stock of existing bitcoins out there remains. It’s not as if the halving comes out of the blue either and so should largely be reflected in current prices.”
Experts also point out that the macroeconomic conditions are different from when previous halvings happened. In 2020 the pandemic meant that boredom and spare cash that couldn’t be spent on travel or socialising were fuelling investment in cryptocurrencies.
Now higher interest rates mean that household budgets are increasingly squeezed and people have less money to spend on speculative investments.
“Is there any point where crypto enthusiasts don’t predict a bull market and stratospheric price rises?” said Ben Yearsley from Shore Financial Planning. “Crypto has previously been around in a zero interest rate environment where there was no cost to holding assets that did not yield anything. Today you can get nearly 6 per cent interest on cash. Different environments lead to different outcomes.”
Concerns also remain about the long-term use of bitcoin. A survey of crypto users by Deutsche Bank found that the proportion of respondents who viewed cryptocurrency as a fad that will fade had doubled from 9 per cent in December 2021 to 18 per cent in September.
“Bitcoin remains pretty economically inert in the real economy, and that suggests the entire project may be doomed to failure. It wouldn’t hugely surprise me if bitcoin hit $50,000 or $1 next year,” Khalaf said.
https://archive.ph/QRw85
I suspect that Crypto-enthusiasts tend to seek to overplay the price-related importance of such highly-telegraphed technical cycles such as this, and that in the past, they've relied on unrelated external macro events that have sometimes aligned with these post-halving periods, and which have subsequently gone on to have much more influence on the price of Bitcoin that these four-yearly halving cycles themselves.
Cheers,
Itsallaguess