Crypto markets are in great anticipation of the future trajectory of Bitcoin with the upcoming halving. The past week saw a tremendous increase in the price and value of the OG-crypto currency. According to CNBC, the automatic halving procedure commences upon the creation of 210,000 “blocks” in the course of mining bitcoins. This occurs roughly every four years and reduces the payout for mining new bitcoin by half, hence discouraging coin production. The following halving event is anticipated to occur in April 2020, which was the last one.
Here are three key things crypto investors should look out for before the Bitcoin Halving:
Current Bitcoin Bull Run
The primary driver of the OG-crypto currency’s price increase has been the demand for Bitcoin ETFs. A supply shock, however, has also added to the price increases. As of right present, there is a shortage of supply and an excess of demand for Bitcoin. The upcoming halving of the cryptocurrency will also change the dynamics of supply and demand for Bitcoin. After the having, the reward for mining additional blocks will be divided in half. In such a situation, the supply of Bitcoin is most likely going to continue to be lower than the demand. If the trend continues, prices ought to rise sharply following the halving.
The price of Bitcoin has climbed above $63,000 in the past and is currently somewhat below its peak of $68.7K, which was reached 27 months ago. The rise suggests that traders are becoming increasingly eager to jump on the Bitcoin bandwagon.
Fed’s March Rate Decision
The Federal Reserve’s March meeting will be highly important to assess the future rate cut trajectory. Initially, Fed Chair Jerome Powell anticipated three rate reductions in 2024, and Fed officials were expected to be cautious following the CPI data. Considering the current expectations and economic data, rate cuts are likely off the table for the March meeting. However, the Fed’s commentary and its tone on the outlook that will be released in March will be extremely important in assessing the macroeconomic backdrop. At present the market is placing bets for rate cuts to begin in September.
If Bitcoin rates do increase after the halving, it will keep the purchasing power under pressure. However, any indication of a delay in the Fed’s rate cut decision will further diminish risk appetite. This can result in a low demand for Bitcoin post-halving.
Monthly Return on Investment for Bitcoin
Return on Investment (ROI) is an important parameter used by many investors to gauge their financial assets. At present, the ROI on BTC remains resilient. Due to Ethereum and BTC’s better returns on investment than other assets including gold, oil, stock exchanges, and other assets, Wall Street investors are dumping money into Bitcoin ETFs.
This trend, if continues for the next month, will likely keep investor traction towards Bitcoin. A higher ROI will also help investors keep a stable risk appetite, thus keeping BTC prices afloat.