How Bitcoin Prices Are Affected By The 'Halving' | Insider News

Insider News2024-03-12

Insider#News#explainer#bitcoin halving#cryptocurrency#bitcoinprice#bitcoin#crypto#altcoins

109K views|4 months ago

💫 Short Summary

The video discusses the upcoming halving event in the crypto world, where new Bitcoin entering the market will be reduced by half, impacting prices. Bitcoin operates on a decentralized blockchain network, with historical data showing previous halving events significantly affecting prices. Factors like macroeconomics and interest rates also influence prices. Despite high price volatility, Bitcoin's accessibility has increased with the approval of Bitcoin ETFs.

✨ Highlights

📊 Transcript

✦

Impact of upcoming halving event on Bitcoin prices.

01:08

Bitcoin operates on a decentralized blockchain network with nodes verifying transactions through mathematical puzzles.

Reward for finding new blocks will be reduced by half, leading to limited supply of Bitcoin.

Historical data shows previous halving events have significantly affected Bitcoin prices.

Other factors like macroeconomics and interest rates can also influence Bitcoin prices.

00:00A major event is going to shake the crypto world.

00:03It's called the halving,

00:04and it happens once roughly every four years.

00:08This will lower the number

00:10of new bitcoin entering the market by half.

00:13But how does this work,

00:15and what does it mean for prices?

00:17I'm Laila Maidan,

00:18and I cover all things investing and money.

00:21So the way that bitcoin works is it's a type

00:24of cryptocurrency that operates on a blockchain,

00:27which is a decentralized network

00:29where transactions can happen peer to peer

00:32or person to person.

00:33Not one government or entity can have control over it.

00:36So because bitcoin is a decentralized network,

00:39there are thousands of computers,

00:41which is what we call nodes,

00:42operating across the globe.

00:44And anyone can own and operate one.

00:46And what they simply do is they solve a series

00:49of complex mathematical puzzles

00:52and verify transactions in the network.

00:54Now, the node or series of nodes

00:56that find the new block are given a reward

00:59in the form of bitcoins.

01:00Right now, that reward is 6.25 bitcoin.

01:04However, that reward is set to be cut in half in April,

01:08down to 3.125 bitcoins.

01:11These rewards are cut in half every four years,

01:14and this event is called the halving.

01:16The reason why they're cut in half every four years is,

01:19well, because we have a limited supply of bitcoin.

01:22There will only ever be 21 million bitcoin in circulation.

01:26Now, I know it sounds like we might be almost

01:28towards the end, since we've already mined

01:30more than 19 million bitcoin.

01:32However, the last bitcoin is expected to be mined sometime

01:36around the year 2140.

01:39Previous halving events have impacted prices substantially.

01:43In 2017, we saw the price rally by over 1,000%.

01:48The same thing happened in 2021.

01:51Now, investors and traders that understand this pattern,

01:54what they'll do is they'll add bitcoin to their position

01:57during a quiet time in the market,

01:59or what's called during the bear market,

02:00and they'll hold on to this asset until the halving event.

02:04And once that halving event takes place,

02:06many that have been holding their bitcoin for a while

02:09tend to wait and try to sell at these high prices.

02:12When the price of bitcoin rallies and goes up,

02:15it tends to pull the entire crypto market up with it.

02:19Those who profited off of the price

02:21of bitcoin are now taking their profits

02:23and throwing it into higher

02:25and more riskier bets like altcoins

02:28to try and make even more money.

02:30So there's a lot of things

02:31that can impact the price of bitcoin outside of the halving.

02:35One of them is macroeconomics,

02:36specifically the US economy and interest rates.

02:39A lot of economists

02:41and the markets are speculating

02:43that the Federal Reserve could begin to lower interest rates

02:46by the end or the second half of this year.

02:49That could help push the price of bitcoin up.

02:52However, it's highly speculative.

02:55Earlier this year, in January,

02:57the SEC approved a series of bitcoin ETFs.

03:01This has made the asset much more accessible,

03:03because you don't have to be a crypto expert

03:05or a bitcoin expert to know where to buy bitcoin.

03:08So now it's more accessible.

03:09What does this mean?

03:10Well, there's more demand for it.

03:12Even though we have historical data

03:15about how bitcoin's price could move

03:17based on certain events,

03:19past performance never guarantees future results.

03:22The cons of this asset is, well,

03:24it's highly volatile in price,

03:26and because of that volatility,

03:28it makes it very difficult for it

03:30to be a medium of exchange,

03:31for example, to be used as money.

03:33It also makes it a little scary to hold it as an investor.

03:37How price may move for bitcoin

03:39in the future still remains unknown.

03:41We can say bitcoin is in price discovery mode right now.

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