Bitcoin Halvings and the Impact on Price
Bitcoin halvings are highly anticipated events that have a significant effect on the price of Bitcoin. Currently, almost 94% of the total 21 million bitcoins that will ever exist have already been mined. By the time of the fourth Bitcoin halving in April 2024, approximately 97% of all bitcoins will have been mined.
The Purpose of Halvings
Bitcoin halvings occur approximately every four years to control the rate at which new bitcoins are created. By reducing the block reward, which happens every ten minutes, the total supply of bitcoins is gradually limited. The initial block reward was 50 bitcoins when Bitcoin was launched in 2009. It has since decreased to 6.25 bitcoins per block reward.
The Effects of Halvings on the Bitcoin Market
Halvings are built into the Bitcoin algorithm and can cause supply shocks in the market. The upcoming fourth Bitcoin halving is expected to have a significant impact on the market due to various factors such as low available supply of bitcoin, institutional adoption, and pending Bitcoin ETFs.
Bitcoin Active Addresses and Wallets
Charts depicting Bitcoin active addresses show distinct peaks in Bitcoin’s history, indicating increased movement between wallets during specific periods. The number of active wallets has been steadily increasing, suggesting that people have been acquiring bitcoin at lower prices over the past couple of years.
The Distribution of Bitcoins Among Wallets
Data from Glassnode reveals that the available supply of Bitcoin is currently at historic lows. This is because holders have been moving their coins out of exchanges and into cold storage or long-term investor wallets since March 2020.
Price Expectations After the Fourth Bitcoin Halving
Historically, the price of Bitcoin has increased after each halving. The current price of $38,400 is more than four times higher than its price at the time of the third halving. Based on previous halvings, it is estimated that Bitcoin could reach $113,000 or potentially a 20% increase in price 150 days after the fourth halving.
Anticipating a Supply Crunch
With only 40% of existing Bitcoin being actively traded and the remaining 60% stored in long-term wallets, there could be a significant supply crunch in the future. Considering these supply dynamics, it is reasonable to expect that the upcoming halving will have a dramatic impact on the market and price, resembling the effects seen during the 2012 event.
Hot Take: The Impact of Halvings on Bitcoin’s Price
The Bitcoin halving events have a profound impact on the cryptocurrency’s price. As more bitcoins are mined and the supply decreases, demand for bitcoin tends to increase, driving up its price. The upcoming fourth Bitcoin halving is expected to have significant effects due to factors such as limited supply, institutional adoption, and market conditions. Based on historical trends, it is anticipated that the price of Bitcoin will continue to rise after the halving event. With increasing interest from investors and growing adoption by institutions, Bitcoin’s price could reach new heights in the months following the fourth halving.
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