Bitcoin is only a few hours from its next supply reduction, termed “the bitcoin halving”, an event that is sparking concern within the cryptocurrency community about a potential sudden collapse of the U.S. dollar. The bitcoin price has struggled in recent weeks despite speculation that China may be preparing for a significant boost to the cryptocurrency’s value.
This comes as warnings about an “authentic” iPhone hack concerning Binance’s bitcoin wallet start to circulate. A respected analyst is now predicting that the upcoming bitcoin halving could significantly increase the bitcoin price to nearly $1.8 million. This would increase Bitcoin’s overall market capitalization to an impressive $35 trillion, even as Wall Street bankers are issuing warnings about serious potential price swings following the halving.
The fourth bitcoin halving, which will decrease the bitcoin block reward from 6.25 bitcoin to 3.125, is due to occur in a matter of hours. This event could drastically impact the bitcoin industry’s dynamics, which have evolved significantly since the last supply reduction in 2020.
The halving event, which reduces the daily supply of new bitcoin from approximately 900 to 450, is mere hours away, according to the NiceHash countdown clock. This will mark the fourth halving event in bitcoin’s history, preceded by events happening in 2012, 2016, and 2020.
According to Noelle Acheson, a bitcoin analyst, if the cycle mirrors the previous one, bitcoin’s value could climb to $450,000 a year from now. However, if the cycle is more in line with 2016, the predicted value stands at $270,000. These estimates are based on previous price performances observed a year after past halving events. However, when referring to Axios data, Acheson suggests that the value of bitcoin could soar to $350,000 or even $1.8 million, attributing bitcoin a $35 trillion market cap.
As for the short-term effects of the halving, Coincover’s head of strategy, Duncan Ash, believes that as more investors seek to buy, the resulting supply and demand imbalance could cause market pressure. However, a balance should eventually be restored when the elevated prices deter new investors, stabilising the market overall. Ongoing industry changes should also result in more users, a higher market cap, and better liquidity, contributing to greater market stability.
This upcoming bitcoin halving carries unique significance. It is the first to occur outside of the Federal Reserve’s era of zero interest-rate policy, the first after the launch of eagerly anticipated bitcoin ETFs on Wall Street, and the first since China’s ban on bitcoin mining in 2021.