How Investors Should Play The Upcoming Bitcoin Halving

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114 بار بازدید - 8 ماه پیش - With the next bitcoin halving
With the next bitcoin halving happening in April, historically a bullish event, investors in the U. S. and worldwide are now contemplating how to position their portfolios to maximize gains from the potential surge. Subscribe now to Forbes' CryptoAsset & Blockchain Advisor and successfully navigate the bitcoin and crypto market roller-coaster. The halving is an automated event hardcoded into the bitcoin network. It occurs every four years (specifically, every 210,000 blocks) when the bitcoin issuance rate is slashed in half. The upcoming halving will reduce the issuance rate from $234,248.37 to $117,124.18 per block based on current prices. These reductions will happen every four years until the final bitcoin is mined in 2140. This time around, the halving is occurring when the price of bitcoin is already rallying, and there is significant anticipation of a bitcoin spot ETF approval by the Securities and Exchange Commission by the end of the upcoming winter (there are 12 applications currently pending from blue chip firms such as BlackRock and Fidelity). Additionally, recent upgrades to the bitcoin protocol (e.g., Taproot) and the potential products and services built on scaling solutions such as Fedmint, Ark, and the Lightning Network are expected to increase bitcoin’s utility in the coming years, which could also impact price over the next cycle. On the other hand, the next halving is coming during unprecedented and volatile economic conditions. A key variable is the highest interest rate in decades, which can harm assets such as bitcoin that do not provide yield on their own. Bitcoin's price has historically surged during each halving period, either in the halving year or two years later. Inflows from institutional capital, financial products, and a growing user base have been significant market drivers. It's also important to note that the all-time low price in each halving period has continuously increased and has never been revisited in subsequent cycles. This applies to all ATLs from cycles H1 through H3 and is documented in the Rising Bottom Hypothesis. Of the factors mentioned above, the approval of a spot bitcoin ETF will likely have the most significant impact on bitcoin's post-halving price. A key reason is that bitcoin now behaves like an uncorrelated asset, as envisioned. During the pandemic, bitcoin was highly correlated with 10-year treasury yields. On the other hand, bitcoin and treasuries became highly uncorrelated when interest rates surged, and bitcoin crashed last year. However, given endogenous cues that led to the recent bitcoin surges, such as the excitement over a spot ETF, bitcoin is starting to chart its own path. This is evidenced by the minuscule correlation between the assets, even if rates remain higher for longer. While it is difficult to underscore how much money could flow into a spot ETF, it will not take much to move the price. The U. S.


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8 ماه پیش در تاریخ 1402/08/26 منتشر شده است.
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