Although bitcoin fell marginally on Tuesday, it continues to trade above $52,330. In the past one month alone, the cryptocurrency has risen by around 26 percent. In the past six months, the token has gone up by 100 per cent.
There are a number of reasons cited for this rally. One was the recent approval to spot bitcoin ETF by the US regulator Securities and Exchange Commission (SEC).
ALSO READ: Bitcoin surges to $50,000 for the first time since 2021 on ETF demand
The second key reason for the ongoing rally is the upcoming bitcoin halving that is slated to happen in the middle of 2024.
Edward Snowden, former NSA (National Security Agency) contractor, has put his weight behind the token’s likely surge.
He wrote on X platform: “”Bitcoin is the most significant monetary advance since the creation of coinage.”
What is bitcoin halving?
One of the significant events of bitcoin is halving when the reward for mining is reduced by half. The last halving was done on May 11, 2020 after which the network participants validating transactions are awarded 6.25 bitcoins for each block mined successfully.
The next halving is slated to happen in mid-2024 after which the block reward will decline to 3.125 bitcoins.
The final halving will occur in the year 2140 when the number of bitcoins circulating will reach the supply of 21 million. As of now, 19 million bitcoins have been mined, leaving only two million more to be mined.
“One of the most important features of Bitcoin is its limited supply and issuance mechanism,” says Forbes quoted Bruce Fenton, CEO of Chainstone Labs, as saying.
To be able to understand the concept behind validating a transaction, one must understand how bitcoin works.
As we are aware that bitcoin’s underlying technology is blockchain which consists of a network of computers called nodes. Each full node is responsible for approving a transaction in bitcoin’s network.
In order to do that, the node conducts a check of the transaction’s validity.
It is vital to note that each transaction is approved individually and after approval, the transaction is added to the blockchain and broadcast to other nodes.
What does the industry believe?
Most crypto industry spokespersons in India believe that this will be a significant event and would play a key role in giving an impetus to bitcoins as well as to other crypto tokens.
“Bitcoin Halving is a proof of the maturity of decentralisation. It’s a demonstration of the genius of Satoshi. Halving controls Bitcoin’s inflation. But the rules aren’t made on the go, but set-in-stone and made immutable in code. Like clockwork, every four years…or nearly every 210,000 blocks, the algorithm cuts the rewards for miners in half. We are now approaching the Fourth Halving since Bitcoin’s inception,” says Ashish Singhal, Co-founder and Group CEO, Peepal Co.
Some even believe that the halving would enable bitcoin break its previous all-time high of $68,789 it reached on Nov 10, 2021.
Vikram Subburaj, CEO, Giottus Crypto Platform, says “Currently, BTC is consolidating near $52,000 after an exciting run in the past 14 months. It is widely anticipated that BTC will surpass its $69,000 all-time high in the quarter post-halving this year. Historically, Bitcoin halving events have led to bullish momentum in the months before and after halving.”
Meanwhile, Sumit Gupta, Co-founder of CoinDCX, says, “With the halving event just 58 days away, there will be a supply shock while the demand continues to grow. This delicate balance between supply reduction and increasing demand creates an environment ripe for momentum, signalling the dawn of the next bull run. Anticipation mounts as we foresee Bitcoin scaling unprecedented peaks post-halving, marking yet another chapter in its remarkable journey within this calendar year.”
“The upcoming halving is another major milestone for investors which is driving the optimism and buy action in the market. It’s important to note that liquidity is improving for the overall crypto market and Bitcoin’s $1 trillion market cap is a testament to the resilience,” says Rajagopal Menon, VP, WazirX.
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