Key Takeaways
Bitcoin’s next halving event is expected to take place Friday or Saturday. The event will halve the current bitcoin block subsidy from 6.25 to 3.125 bitcoin. Previous halving events sparked bitcoin price moves to new all-time highs in the months that followed. As bitcoin miner revenue declines over time, experts say the industry will need to move towards a model based on transaction fees rather than the issuance of new bitcoin.
Bitcoin Halving Event
The bitcoin halving—in which the amount of newly issued bitcoin created roughly every ten minutes is cut in half—is expected to take place on Friday or Saturday. In the past, this event has been followed by a significant rise in the price of bitcoin, but analysts are divided over whether that will occur this time around.
- Bitcoin already hit all-time highs above $73,000 last month, the first time record highs have been hit ahead of a halving event, though the price has retreated in recent weeks.
- After the halving, the incentive for bitcoin miners and the pace of issuance of new bitcoins will come down by half.
- Bitcoin mining is the process by which all transactions on the Bitcoin blockchain are verified and new bitcoins are minted.
Impact on Bitcoin’s Price
Even though the general schedule of the halvings is known to the market beforehand, the 50% drop in the regular creation of new bitcoin is thought to lead to an alteration in the crypto asset’s supply and demand dynamics. Analysts say that this bitcoin halving is different for a number of reasons and that a bitcoin rally may not ensue.
- The largest cryptocurrency by market capitalization hit a new all-time high this four-year cycle prior to the actual halving taking place for the first time in its history.
- Analysts at Deutsche Bank say that the halving is “partially priced in” and that they do not “expect prices to increase significantly following the halving event.”
Bitcoin Halving and Stocks
In theory, there are three types of stocks that could be affected by the bitcoin halving—miners, companies that hold bitcoin, and bitcoin trading platforms.
- Bitcoin Mining Stocks: As the incentive for mining gets cut in half, it threatens the revenues and consequently the stock prices of bitcoin miners.
- Bitcoin Investors and Trading Platforms: Any volatility around halving would mean higher trading volumes, something that could affect trading platforms such as Coinbase or Robinhood.
