The Bitcoin network completed its fourth-ever “halving” on Friday evening, reducing the rewards earned by miners from 6.25 to 3.125 bitcoins. This event has led to volatility in the price of Bitcoin, which fell about 4% this week to trade around $64,100.
While the halving itself shouldn’t affect the price of Bitcoin in the short term, many investors are expecting significant gains in the months ahead, based on the cryptocurrency’s performance after previous halvings. After the 2012, 2016, and 2020 halvings, the Bitcoin price increased about 93x, 30x, and 8x, respectively, from its halving day price to its cycle top.
However, the halving will cut industry revenues in half, potentially triggering a wave of consolidation and business closures. This could rationalize the network hashrate and industry capex, benefiting the remaining operators. Mining stocks have been volatile leading up to the event, with many down by double digits for the year, after rallying between about 300% and 600% in 2023.
Some analysts expect the near-term Bitcoin price to fall after the halving, citing overbought conditions and prices that are still above the cryptocurrency’s comparison to gold when adjusted for volatility.
Read more at: www.cnbc.com