Key Points
- The Bitcoin blockchain halving is set to take place in four days, which could potentially impact its status as a value store.
- The halving event could cut Bitcoin’s inflation rate in half, potentially causing its price to rise if demand remains constant or increases.
The anticipated Bitcoin blockchain halving is expected to take place within the next four days. This significant event has led to speculation among analysts about its potential impact on Bitcoin’s status as a value store.
As of now, approximately 630 blocks remain to be mined before the Bitcoin halving takes place. This marks a significant milestone in the cryptocurrency space, set to occur on April 19. In 2024, Bitcoin’s price reached an all-time high of over $73,000. The United States Securities and Exchange Commission also approved the listing and trading of Bitcoin spot exchange-traded funds on exchanges. Despite these developments, the crypto asset’s price continues to exhibit volatility.
Bitcoin as a Hedge Against Inflation
Several financial analysts and crypto users argue that Bitcoin could serve as an effective hedge against inflation. This is particularly relevant as central banks worldwide, including the United States Federal Reserve, devalue fiat currency by printing money. In contrast, Bitcoin has a fixed supply of 21 million, with approximately 19.7 million already mined.
The upcoming Bitcoin halving, the fourth in its history, will cut the block reward for miners from 6.25 Bitcoin to 3.125. This event will effectively halve Bitcoin’s inflation rate from approximately 1.7% to 0.85%. This reduction in the new supply of Bitcoin could potentially cause its price to rise if demand stays constant or increases.
Historical Trends and Future Predictions
Historically, all Bitcoin halving events have eventually led to price increases. Bitcoin is already used by many U.S. users as a hedge against dollar inflation. Users in countries experiencing hyperinflation, such as Argentina, may also turn to Bitcoin.
The approach that different countries adopt towards Bitcoin regulation can significantly impact its price. Analysts often closely monitor the United States’ regulatory approach at both state and federal levels, as it accounts for approximately a third of all mining.
The upcoming halving will likely enhance Bitcoin’s value store proposition for crypto users due to increased scarcity. There is also growing interest in how Bitcoin will compare to gold after the event. Despite Bitcoin’s expected price volatility following the halving, its inflation rate is predicted to drop below that of gold.
Historical data and the forthcoming halving suggest that the last Bitcoin block reward could be mined in 2140, over 100 years from now. At that point, according to the Bitcoin white paper, miners’ incentive “can transition entirely to transaction fees” once all 21 million coins have been mined.