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Bitcoin halving is scheduled for this weekend – here’s how it will impact the cryptocurrency market
The cryptocurrency community is gearing up for the upcoming Bitcoin halving event, which is expected to take place this weekend.
As for the halving event, the specific calendar dates are not set in stone; however, it typically occurs approximately every four years. Based on current projections, the next halving is expected to occur either on Friday evening or Saturday morning.
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What is Bitcoin halving?
The halving is a change to Bitcoin’s core blockchain technology, aimed at reducing the rate at which new bitcoins are generated.
Since its creation by the pseudonymous Satoshi Nakamoto, Bitcoin has been structured to have a limited 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 halving process will continue until 2041, when all Bitcoins will have been mined. However, this particular Bitcoin halving event is expected to deviate from its predecessors due to recent geopolitical tensions between Iran and Israel, which have sparked market instability. As a result, Bitcoin witnessed a significant decline, plunging to its lowest level in a month. Bitcoin fell more than 5.5% to $59,961 during the Asian session on Friday.
“In the long term, this reduction in supply could attract more institutional and retail capital, while also amplifying Bitcoin’s stock-to-flow ratio. ZebPay is optimistic about both the short-term and long-term outlook for Bitcoin and the broader cryptocurrency market,” said Rahul Pagidipati, CEO of ZebPay.
Read also: Bitcoin Halving Set for April 20, Here’s What It Means; Should You Invest?
What impact will the bitcoin halving have on the cryptocurrency market?
Experts say the halving event could impact the price of Bitcoin, as its increased 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 consistently observed in past cycles, including 2016 and 2020, where the cryptocurrency often reaches new all-time highs, according to experts
After the rally, there is often a retracement period which tends to occur around 28-14 days before the halving. This pattern is highlighted in the 2020 cycle with a 19% retracement and in the 2016 cycle with a more pronounced retracement of up to 40% when taking bearish wicks into account.
Rajagopal Menon, VP of WazirX, said: “After the halving, Bitcoin typically enters a phase of sideways movement, which can be called 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 post-halving reaccumulation phase, Bitcoin tends to experience a parabolic increase in price. This pattern is evident in discussions of post-2020 halving events, where a significant movement on the rise it followed the halving and reaccumulation phases.”
Menon further added, “The general consensus is that prices are expected to rise due to the supply shock, but geopolitical events like the threat could cause the market to crash as happened last weekend.”
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