Bitcoin Halving: Investors Should Expect Price Volatility
Sub Headline: Head of research at 10x highlights impact of supply reduction
Experts say past halvings have preceded price increases, but note different market conditions this time around
The upcoming Bitcoin halving in May 2024 is causing ripples of excitement and uncertainty in the cryptocurrency community. The halving, which occurs every four years, involves reducing the block reward for mining new Bitcoins by half. This reduction in supply can lead to price increases, as historical data suggests. However, experts caution that market conditions may differ this time around.
Markus Thielen, the head of research at 10x, notes that previous halvings have indeed been associated with price increases due to the reduced supply. For instance, after Bitcoin's first halving in November 2012, its price rose from $12.35 to $127.5 in five months. Similarly, after the second halving in 2016, Bitcoin's price surged from $650 to $19,500 within a year. However, Thielen emphasizes that these price increases occurred under different market conditions.
The upcoming halving takes place amid concerns about a potential economic recession and increased regulatory scrutiny of the cryptocurrency industry. These factors could dampen the expected price increase or even lead to a price decline. Nevertheless, some investors remain optimistic, believing that Bitcoin's long-term value proposition and scarcity will continue to attract buyers.
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