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Bitcoin's 2024 Bash🎉
Every 4 years, Bitcoin's mining reward halves, sparking market speculations. Past halvings led to price dances. With 2024 approaching, will it be a price fiesta or a quiet two-step?
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Every four years, there's a celebration in the Bitcoin universe.
The bitcoin halving party.
And the 2024 version of it is almost here.
Is it going to be the blast that the crypto world expects/deserves at this point?
First off, what is Bitcoin halving?
Bitcoin halving is an event where the speed at which new Bitcoins are made gets slashed in half.
Imagine a vast goldmine, with miners digging deep and striking shiny Bitcoins.
For every chunk (or block of transactions) they mine, they get a glittering reward in Bitcoins.
Every four years, this here goldmine gets a little stingy.
The gold reward? Halved.
Started with a hefty chunk?
Four years later, you're lugging just half.
And another four? Yup, a quarter chunk.
The coin's getting rare, partner.
Since Bitcoin's inception in 2009, there have been three halving:
2012's Hoedown: The block reward was reduced from 50 bitcoins to 25 bitcoins.
2016's Jamboree: Those 25 got halved again to 12.5 Bitcoins.
2020's Shindig: Darn it, down to 6.25 Bitcoins now.
Why the Halving?
The rationale behind the halving mechanism is to control inflation.
Make the gold rare, and folks will be clamouring for it.
Satoshi Nakamoto, Bitcoin's mysterious creator, intended for Bitcoin to be a deflationary currency.
By reducing the rate at which new bitcoins are introduced, the halving mechanism ensures that only 21 million bitcoins will ever exist.
This scarcity can drive demand and potentially increase the value of each coin.
Market Implications: Halving tends to be significant events in the crypto world due to their potential impact on the price of Bitcoin.
Some believe that halving can trigger price surges because of the reduced supply of new bitcoins entering the market.
However, several factors influence Bitcoin's price, and it's hard to attribute price movements to halving alone.
First Halving (November 28, 2012)
Pre-halving price: A month before the halving, Bitcoin was trading around $12.
Post-halving price: Roughly a year after the halving, Bitcoin reached a price of over $1,000 in late 2013.
This was a significant surge, although various other factors, including increased media attention and adoption, also played a role.
Second Halving (July 9, 2016)
Pre-halving price: A month before the event, Bitcoin was trading around $670.
Post-halving price: While there wasn't an immediate spike right after the halving, the cryptocurrency embarked on a notable bull run in 2017, reaching an all-time high (at that time) of nearly $20,000 by December 2017.
Third Halving (May 11, 2020)
Pre-halving price: Leading up to the halving, Bitcoin was trading around $8,000-$10,000.
Post-halving price: The following months saw Bitcoin's price remain relatively steady, but then it began a significant bull run towards the end of 2020 and into 2021. By April 2021, Bitcoin reached a new all-time high of over $64,000.
Miner Implications: Halving directly affect miners, as their rewards for processing transactions get reduced.
This can lead to concerns about the profitability of mining, especially when the costs of electricity and equipment remain high.
The 2024 halving
Now, we're 87% through since the last halving in May 2020.
Wait until mid April, 2024
“Things that we most anticipate generally don’t happen.”
Bloomberg analyst Mike McGlone says the 2024 halving might not follow the script. Even though the halving makes new Bitcoins harder to come by, if there isn't enough demand, the price might just give a nonchalant shrug instead of a joyous jump.
Crypto analyst Nicholas Merten believes that the upcoming Bitcoin halving in 2024 will not have the same bullish impact as previous halving. He argues that while the halving reduces the inflation rate in half, the impact on new supply is getting weaker over time.
Binance CEO CZ, believes that the next halving could lead to renewed price growth and potentially reach all-time highs.
Role of LTHs
76% of the Bitcoin supply is presently in the hands of long-term holders (LTHs). This figure is nearly on par with the all-time high from 2015.
LTH Behaviour: During market lows, LTHs typically remain steadfast, holding onto their assets. Conversely, during bull runs, LTHs tend to sell, shifting coins to short-term holders looking for swift gains.
Pre & Post-Halving Trends: Historically, the peak for LTH supply is seen a few months before a Bitcoin halving.
Following the halving, the LTH supply tends to plateau, and roughly six months later, a marked reduction in this metric usually heralds the beginning of a robust bull market.
According to crypto analyst Rekt Capital, historical Bitcoin halving cycles suggest that a major price correction could be on the horizon.
Based on data from the previous two halving, BTC could drop by up to 38% before the next halving.
The analyst's chart shows that a significant pullback has occurred around six months before each halving, with BTC retracing 25% in 2015 and 38% in 2019. This current retracement could be the start of a similar cycle.
According to a recent report by Morgan Stanley, the "crypto winter" may be over as Bitcoin's upcoming halving event approaches.
“Based on current data, signs indicate that crypto winter may be in the past and that crypto spring is likely on the horizon,” Galindo said. “However, keep in mind that there have only been three crypto springs to date. In other words, there is still a lot to learn.”
Multiple analytics models suggest that Bitcoin (BTC) is likely to reach $130,000 or more by the end of 2025.
Trader and analyst CryptoCon predicts a two-year target of around $130,000 for BTC. Various BTC price forecasts are converging on this price point, indicating a bullish long-term roadmap. CryptoCon's analysis shows that the area around $130,000 is becoming a magnet for Bitcoin.
As the crypto world gears up for the next Bitcoin halving, tracking the actions of long-term holders and their historical behaviours could offer invaluable insights into potential market shifts.
TTD Week That Was 📆
Friday: SEC's Playing tag?
Thursday: To democratic AI 🍻
Wednesday: Hamas' crypto, Coinbase's headache 🤯
Tuesday: What goes up, comes down🚨
Monday: SEC vs / Grayscale⚔️
TTD Week in Funding 💰
Upland. $7 million. A blockchain real estate collecting and trading game.
SynFutures. $22 million. A decentralised crypto derivatives exchange.
Coin Metrics. $6.7 million. Provides data on cryptocurrency markets, networks and prices.
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