Bitcoin halving event draws near. What are the best times to buy Bitcoin before the halving?
Some analysts seem to have answers.
As Bitcoin continues to gain momentum, renowned investor "Raoul Pal" predicts a bright future for the cryptocurrency in 2024.
Moreover, Pal's analysis, based on bullish market indicators and recent crypto market trends, suggests that Bitcoin has the potential to outperform tech stocks during this period.
Pal's optimism is supported by the GMI Financial Conditions Index, which indicates that crypto and growth assets like NDX will likely experience significant growth in the coming year.
Additionally, analyst Vetle Lunde from K33 Research echoes this sentiment, highlighting the high interest and price premiums observed on the Chicago Mercantile Exchange (CME).
One highly anticipated event that is creating excitement among investors is the Bitcoin halving scheduled for April 2024, when the block height reaches 840,000.
However, speculation on the market's performance during this time is rife, with analysts suggesting that buying Bitcoin six months before halving and selling it 18 months later could result in substantial profits.
This strategy takes advantage of Bitcoin's cyclical price movements surrounding the halving event.
It's important to note that Bitcoin has a finite supply of 21 million coins. The system ensures that no more than 21 million bitcoins will exist, making it an economically valuable asset.
Moreover, this scarcity is pivotal in supporting Bitcoin's value system.
Bitcoin is distributed through a process called mining, and the scheduled completion date for mining all 21 million bitcoins is estimated to be in the year 2140.
At the current emission rate, all remaining bitcoins are projected to be mined well before this speculated time.
Approximately 90% of the total Bitcoin supply has already been mined, with around 900 bitcoins being mined daily.
To sustain the emission rate and increase scarcity, the number of bitcoins emitted per block is regularly reduced through a process called "Bitcoin Halving."
After every 210,000 blocks or approximately four years, the number of new bitcoins created per block is halved.
Moreover, the Bitcoin halving in 2020 reduced the emission rate from 12.5 bitcoins per block to 6.25 bitcoins per block.
Bitcoin halving serves two essential purposes. Firstly, it creates a scarcity pattern for Bitcoin, reducing the rate at which new coins enter circulation to meet the rising demand.
Thus, this scarcity solidifies Bitcoin's status as a store of value as it becomes increasingly scarce over time.
The effect of halving Bitcoin's value extends beyond traditional supply and demand economics, as it taps into market sentiments and the desire for scarce commodities.
Secondly, the halving process sustains Bitcoin mining by incentivizing miners to validate blocks and secure the Bitcoin network from malicious attempts.
Meanwhile, as long as the emission rate of new bitcoins continues to decrease, miners are motivated to participate in the mining exercise, ensuring the security and longevity of the Bitcoin blockchain.
Conclusions
Raoul Pal's optimistic prediction for Bitcoin's performance in 2024, backed by market indicators and recent trends, suggests that the cryptocurrency has the potential to outperform tech stocks during this period.
Moreover, the upcoming Bitcoin halving in April 2024 adds to the excitement surrounding the market, with speculation on its impact on prices and profitability.
With its finite supply and decreasing emission rate, Bitcoin's value as a store of value and its sustainability in terms of mining are further enhanced.