Crypto experts remain uncertain on short-term Bitcoin price impact post Halving

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The most valued crypto token Bitcoin is unlikely to see any drastic price increase at least in the next few weeks following the Halving event on April 20, according to industry experts. The fourth Halving happened at a time when the crypto prices remained unstable amidst macroeconomic and geopolitical uncertainties.

Bitcoin, though, continues to see some tailwinds driven by institutionalisation of the token through the approval of Bitcoin Spot ETFs in the US and Hong Kong.

Bitcoin Halving happens every four years, wherein when the new Bitcoins are mined the reward for mining gets split in half.

According to Sidharth Sogani, co-founder and CEO at crypto research firm CREBACO Global, there has not been any immediate impact as the prices have remained flat. “Going by the past trends, it takes about three-four weeks after Halving for the prices to go up,” he told Moneycontrol.

“Also the price jump we were expecting to the run-up to the Halving event, took place earlier than we expected with the Bitcoin ETF approval. Now the post Halving all-time high may take another three to four months to happen,” he added.

What is Bitcoin Halving?

When Bitcoin was first launched, it was created in a way that its supply would be capped at up to 21 million Bitcoins.

To mine Bitcoin as a reward, miners solve complex mathematical problems that lead to adding transaction blocks to Bitcoin’s blockchain network. So after every 210,000 blocks of transactions, which takes about four years to complete, a Bitcoin Halving event occurs. Halving event leads to the number of bitcoins mined as rewards for solving problems getting halved.

The first Bitcoin Halving happened in 2012, after which the miners were getting 25 BTCs as rewards, this got halved to 12.5 BTCs after the 2016 Halving event. During the 2020 Halving event, following which the crypto industry saw a global boom, Bitcoin rewards had halved to 6.25 BTCs.

After April 20, Halving, Bitcoin rewards have now split to 3.125 BTCs.

Markets were priced as per Halving

According to Parth Chaturvedi, Investments Lead, CoinSwitch Ventures, the markets were priced accounting for the upcoming halving, so there wasn’t any major volatility close to the event.

“But if you see yesterday’s stark contrast in Tech stock prices tanking but crypto prices moving higher; one can understand how crypto is decoupling itself as a new asset class,” he told Moneycontrol.

He added, “Broadly prices are lower from their recent highs due to geopolitical tensions, but we can expect near-term downward pressure as miners and ecosystem participants adjust to the new supply dynamics. The 4th halving brings BTC’s annual inflation to less than gold’s and will further push investors to explore it as a ‘store of value’ asset class.”

Also read: Bitcoin just surpassed its all-time high price, what’s driving this rally?

Mridul Gupta, COO, CoinDCX said with the supply becoming constrained, the prices of Bitcoin will definitely go up in the long run as seen with all the past Halvings too.

“Now, if you look at the next 30-45 days, it (price jump) is very hard to come in short-term trends. But over a long run, BTC Halving leads to lower rewards, lower volume leads to lower supply, which will put more pressure and cause a price increase,” he said.