As the Bitcoin (BTC) halving approaches in the next four days, there is speculation among analysts about how this event could impact the cryptocurrency’s status as a store of value.
Currently, there are approximately 630 blocks left to be mined before the Bitcoin halving takes place, which is expected to occur around April 19. In March, the price of BTC reached an all-time high of over $73,000 after the United States Securities and Exchange Commission approved the listing and trading of spot Bitcoin exchange-traded funds in January. However, the price of BTC has continued to show volatility.
Many cryptocurrency users and financial analysts believe that Bitcoin can serve as an effective hedge against inflation, as central banks around the world, including the US Federal Reserve, are devaluing fiat currency by printing money. In contrast, Bitcoin has a fixed supply of 21 million coins, with approximately 19.7 million already mined.
On April 19, the halving will take place, marking the fourth halving event in Bitcoin’s history, with the previous one occurring in May 2020. This event will reduce the block reward for miners from 6.25 BTC to 3.125 BTC. As a result, Bitcoin’s inflation rate will be cut in half from approximately 1.7% to 0.85%. This decrease in the new supply of Bitcoin could potentially cause its price to rise if demand remains constant or increases.
Historically, all previous BTC halving events have led to price increases. Many users in the US already use Bitcoin as a hedge against inflation, and there is potential for more users in countries with hyperinflation, such as Argentina, to turn to Bitcoin as well.
“It’s becoming increasingly evident that Bitcoin and digital assets offer more than just a means of payment with crypto for users,” said Marcos Nunes, CEO of Gnosis Pay. “Instead, these assets serve as a lifeline for millions of people around the world who live in countries with economic turmoil and hyperinflation.”
The way countries regulate and adopt Bitcoin can also have an impact on its price. Analysts closely monitor the regulatory approach of the United States at both the state and federal levels, as the country is responsible for about a third of all mining.
Following the halving, the increased scarcity of Bitcoin is likely to make its store of value proposition more appealing to cryptocurrency users. Many are also considering how Bitcoin will compare to gold after the event. While gold has been seen as a more traditional store of value for traders who are not necessarily interested in crypto, this dynamic could change.
Bitcoin’s price volatility is expected to continue after the halving, but its inflation rate is anticipated to drop below that of gold once again. This is because gold miners will increase the percentage of the gold supply at a faster rate than crypto miners will increase the percentage of the Bitcoin supply. Prominent gold enthusiast Peter Schiff has yet to address this issue directly on social media, instead focusing on the price of Bitcoin in his recent posts.
Based on the upcoming halving and historical data, it is projected that the last BTC block reward will occur in the year 2140, over 100 years from now. At that point, as stated in the Bitcoin white paper, miners will rely solely on transaction fees, as all 21 million coins will have been mined.
Source: Sinz 21st.Capital
In conclusion, as the Bitcoin halving approaches, there is anticipation about its impact on the cryptocurrency’s status as a store of value. The halving will reduce the block reward for miners, potentially decreasing the new supply of Bitcoin and causing its price to rise. Bitcoin has historically been seen as a hedge against inflation, and its scarcity following the halving could make it even more appealing. The way countries regulate Bitcoin can also affect its price, and there is speculation about how it will compare to gold after the event. Overall, this event has significant implications for the future of Bitcoin and its role in the global economy.