Saturday, January 11
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Several Months In: Why Bitcoin stays low despite the coming and going of the halving

The fact that the leading cryptocurrency, Bitcoin, attracts masses of new investors these days should be no shocker. Whether we talk about newbies to the sector or investors who have soon regained hope after the few events that boosted the Bitcoin price prediction, the flagship crypto still registers demand. Multiple investment firms have recently received the O.K. to issue Bitcoin-based exchange-traded funds (ETFs), pushing the crypto coin’s price to new peaks. Furthermore, a quadrennial protocol event named “halving” has occurred more than six months ago, slashing miners’ rewards for developing and registering Bitcoins. This reduced the asset supply, marking an event historically proven to harbinger bull runs. As history has proven, Bitcoin begins registering price spikes a few months after the halving, so what’s happening now?

Bitcoin

Bitcoin has breached its $106K threshold this year, and despite the long time taken to explode post-halving, experts state that the asset has never witnessed price gains immediately after the event’s finalization. Looking closer at the current factors and conditions, the theory may still hold up.

First, a quick summary and market outlook

For there’s been no fanfare or fireworks, the eagerly-awaited Bitcoin halving that’s passed has come and gone without waking up the town. As the countdown began, miners could count the few moments left to mine and receive a fair 6.25 BTC reward. Furthermore, the asset’s price reflected any other ordinary day in the coin’s history.

Nevertheless, just because the event went untrumpeted, it’s far from being a non-event. The protocol’s rule, according to which miners are now recompensed 3.125 for creating and adding new blocks to the chain, has numberless implications for investors and traders alike. With the halving of the rate at which fresh coins enter the market, crypto’s built-in security system control demonstrates its bearing in time. The repositioning of supply and demand dynamics may reshape Bitcoin’s long-term trajectory and the behavior of the broader cryptocurrency market.

It’s just how Bitcoin has accustomed investors

The bulk of crypto-interested individuals heard that Bitcoin halvings precede astonishing price rises. Yet few focus on the actual weighty matter in the equation, namely the course of events and the timeframe within which prices move. Bitcoin halvings are massive milestones, but performance charts have disclosed that the price can register gains even after more than half a year after the halving’s conclusion, so investors justifiably hold on to their assets and hopes.

Tracing back to the first block reward cut in 2012, Bitcoin was listed at a little over $10 before the event and rose to over $13 right after. Moving on, Bitcoin’s price stood at $583 the month leading up to the 2016 halving and jumped to about $597. Unexpectedly, Bitcoin’s tag fell to a low of $670 around the time of the reward cut, only to establish the pattern we’re sticking to today as it started to surge and record a blinding $2,550 by July 2017.

Fast forward, and the $6,900 price registered by Bitcoin prior to the 2020 halving was about to witness rises that sent it to about $9,850 right after the milestone. The price inflated so much in late 2020, going from a humble $11,000 in October of that year to an unexpected $60,000 by March of the following year, that Bitcoin emerged as an asset with unparalleled growth potential.

Around those blessed times, many investors chose to cash in on their investments and sell their Bitcoin at $20K, $30K, $40, and so on, leaving us to see a slight portion that’s stuck to their investments all throughout the journey. For reasons like these, experienced investors and crypto experts emphasize the HODLing strategy as being the most rewarding one, even if it puts investors’ patience to the test.

At the first call, Bitcoin’s halving stabilizes the price

Despite the late, well-awaited event, Bitcoin’s price stability remains unshattered. Hovering under the $110K threshold, at best, experienced investors are looking at Bitcoin through long-term glasses after they’ve likely already witnessed the waves of the 2020 halving.

On the other hand, other pundits believe the update’s aftermaths exceed Bitcoin’s price area. Since Bitcoin’s halving is a historical leap, many investors keep tabs open on its behavior. And with the impressive gains of 150% registered since the beginning of the year and a market cap of over $1.4TN, it’s safe to say that the bigwig is strengthening its position as a powerful investment tool. Fortunately, it’s the quietness before the storm we may witness. The Bitcoin wave could go as high as $130B by 2025, as numberless current predictions estimate, so trying to catch glimpses of the iceberg’s tip could, for now, remain a guessing game.

A significant factor is the impact left on miners, too

Miners could keep navigating stormy waters. The immediate impact of the reward reduction is inevitably felt by Bitcoin miners, those who receive substantially fewer incentives. Thus, they see their motivation to develop and add blocks to the chain fade away.

At first glance, the hit taken impacts the activity’s lucrativeness and miners’ revenues, possibly driving change in the whole crypto sector.

The asset rises in scarcity directly with the lowering of the rate at which freshly mined bitcoins break into the market. Nevertheless, this aspect represents a built-in deflationary mechanism intended to keep the asset’s valuation on an ascending path by developing potential lasting upward price pressure.

BTC ETFs must be taken into consideration

A few recent and highly trumpeted events, including the reelection of Donald Trump as U.S. president and the high-profile media presence of bigwigs like Elon Musk, pushed the crypto further. The rally is considered to have started after the debut of ETFs, nevertheless. More than ten months after the new financial tools’ approval, the ETFs keep prompting new waves of investors, which ultimately favors the leading crypto’s valuation. This optimistic plot is to be considered when weighing the potency of the halving in dragging the Bitcoin price up.

Last words 

Nine months after Bitcoin’s last halving, audiences keep an eye out to see how its well-awaited aftereffect on the price continues and, ultimately, on their portfolio’s revenue. The whole focus moves over a timeframe of weeks to months. Data now indicates there’s no shortcut to new ATHs. While the asset’s valuation has generally risen around the halving, especially once it was completed, it’s far-fetched to compare the growth with a straight line up.

Bitcoin has frequently pulled back when it was approaching new peaks, especially seven to eight months later. While it’s depicted as a short-term event, its full impact frequently takes months to be noticed. The asset managed to achieve an unexpected $106B by the moment of writing. Stay tuned if you want to know where the market is going and what Bitcoin has in store for investors for the upcoming months.

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