With the continuous changes in the “atypical bear market”, the narrative of “halving” in the cryptocurrency world, which has never faded, has arrived. On April 20, 2024, the block reward is about to decrease from 6.25 BTC to 3.125 BTC.
Everything in the past is just a prologue. As one of the most important narratives in the cryptocurrency industry, “Bitcoin halving” has always been a tonic to boost market confidence. Now that the bull market seems within reach, will this halving cycle follow the same pattern as before?
The history of halving
For the cryptocurrency industry, each halving is a grand event, especially the first two halving cycles of Bitcoin, which saw astonishing increases of tens of times (although there were short-term declines after the first two halvings when all the positives were exhausted, but they eventually adjusted and entered a long-term upward trend).
However, starting from the third halving in 2020, due to the significant increase in the number of industry practitioners, market attention, and the improvement of supporting infrastructure, Bitcoin is no longer a niche product limited to geeks but has begun to interact with more external factors.
To summarize briefly:
Before the first two halvings (in 2012 and 2016), geeks in the industry were more concerned about the possibility of Bitcoin as electronic cash.
During the third halving (in 2020), the focus on Bitcoin shifted to its role as a payment tool, which triggered a series of debates (followed by the BCH fork, which was almost the top trend in the industry).
In the fourth halving cycle (in 2024), with the approval of Bitcoin spot ETF applications, Bitcoin has become an alternative asset, and the focus has shifted to the layout of traditional institutions and capital.
Compared to the first two halvings, the third halving of Bitcoin attracted unprecedented attention. At the same time, the overall global political and economic environment during the third halving also affected its performance: under the influence of macro factors, from March 12 to March 13, 2020, two months before the halving on May 11, Bitcoin plummeted from $7,600 to a low of $3,600, causing the overall market value to evaporate by $55 billion, and more than 20 billion RMB worth of positions were liquidated, accurately achieving a “halving of prices.” However, after the halving in May, DeFi Summer ushered in a new bull market cycle, and Bitcoin soared to $60,000, nearly 20 times higher than the previous low before the halving.
Overall, according to the law of historical halving cycles, from a traditional perspective, the price of Bitcoin during halving is expected to return to half of the previous bull market price. And just last month, the price of Bitcoin reached the price of the previous bull market, exceeding $60,000, and even broke through $71,000.
So, will a new bull market cycle begin after the halving? Can it achieve an increase of more than 10 times in the current volume?
New variables in the Bitcoin ecosystem
However, at the same time, in the context of Bitcoin having gone through three halvings, with block rewards reduced to 6.25 and over 19 million BTCs already mined, it is time to reconsider many situations and things from a new perspective.
Especially in this round of Bitcoin halving, there have been some noteworthy new variables compared to the previous halvings, both in the industry as a whole and within Bitcoin itself.
(1) Transaction fee income
According to the halving rules of Bitcoin, the block reward started at 50 BTC and is halved every four years. It has already halved three times to 6.25 BTC, and the next halving will be in 2024. As the halvings continue, the block reward will gradually decrease and approach zero, making the income of block producers become very singular, with only transaction fee rewards.
Since 2023, the prosperity of the Bitcoin ecosystem, especially the BRC20, has sparked a new wave of “BitcoinFi”, resulting in a surge in transaction activity within the Bitcoin ecosystem, thereby boosting transaction fee income for Bitcoin.
Among them, the mining fee income on December 17, 2023, reached a new high in nearly 5 years, reaching 696.95 BTC (about $19.08 million), accounting for over 40% of the miners’ total daily income.
(2) Approval of Bitcoin spot ETFs and development of the Bitcoin ecosystem
A. The Rune fever
At the end of 2023, the “Rune fever” swept through. On the basis of the existing expansion of Bitcoin, the Ordinals protocol and BRC20 protocol were successfully implemented, opening the door to the Bitcoin ecosystem. Please see:
“What is the ‘Rune’ in Bitcoin, and does it mean a zero due to its vulnerability, as viewed by core developers?”
Due to the popularity of Rune, attention shifted from Ethereum to Bitcoin, especially among institutions who began to invest in Bitcoin’s ecosystem infrastructure. It also indicated the arrival of “Bitcoin Summer”.
B. Bitcoin Layer 2
Recently, BEVM, BOB, and other Bitcoin Layer 2 projects have completed financing ranging from millions to tens of millions. In addition, the launch of Nervos’ RGB++ and Seal’s minting has caused a surge in interest in CKB, which is a Bitcoin Layer 2 project.
Currently, there are many Bitcoin Layer 2 projects on the market, which can be roughly classified into four categories: Bitcoin sidechains, UTXO+client verification, Roullp, and Taproot Consensus. Please see:
A Brief Overview of Popular Bitcoin Layer 2 Solutions (Part 1)
A Brief Overview of Popular Bitcoin Layer 2 Solutions (Part 2)
C. Rune fever
Just a few days before the upcoming Bitcoin halving, activities related to Ordinals and Rune in the Bitcoin ecosystem have been heating up.
Ordinals, launched by @rodarmor in January 2023, increases the amount of data that can be stored on the blockchain, thus promoting Rune. This has sparked a series of innovations using the system, such as BRC-20 and Rune, which have differences as shown in the table below.
With the upcoming Bitcoin halving and the launch of the Rune protocol, the transaction volume of Ordinals has grown exponentially. It is worth noting that in the past month, Bitcoin’s transaction volume has almost matched Ethereum’s, with OKX and MagicEden being the main markets.
The most well-known NFT collections on Ordinals are NodeMonkes, BitcoinPuppets, and QuantumCatsXYZ. In addition to strong community support, the holders of these collections have received various airdrops, some of which have significant value, creating a wealth effect for the Ordinals/Rune ecosystem. Similar to WIF, this has generated a loyal community, which helps to drive the story development more strongly. Therefore, the market is currently very excited about the Rune protocol.
D. Bitcoin spot ETFs
At 4 am on January 11, 2024, Beijing time, the U.S. Securities and Exchange Commission (SEC) simultaneously approved 11 Bitcoin spot ETFs.
The significance of Bitcoin spot ETFs lies in two aspects:
First, it increases accessibility and popularization. As a regulated financial product, Bitcoin ETF provides a opportunity for a wider range of investors to access Bitcoin.
Second, it gains regulatory recognition and enhances market acceptance, helping them to operate in the cryptocurrency industry.
What impact does the approval of Bitcoin spot ETFs have on the Bitcoin ecosystem?
The approval of spot ETFs undoubtedly gives a boost to the entire cryptocurrency industry, including the Bitcoin ecosystem. Bitcoin assets may become more stable and less volatile in the future.
In simple terms, when there is high volatility in the past, the development of ecological projects often encounters obstacles in the bear market. Entrepreneurs and users lack confidence, funding decreases significantly, and there is talent loss, among other problems.
As a native asset of the Bitcoin ecosystem, a steadily rising Bitcoin price is beneficial for ecosystem development, avoiding the impact on ecosystem development during extreme market conditions.
In summary, the approval of spot ETFs allows the Bitcoin ecosystem to develop with more confidence and gain more recognition.
After the fourth halving, where will Bitcoin go?
As early as the Chinese New Year, when the price of Bitcoin broke through $40,000, institutions and individuals had already made predictions for the price of Bitcoin, with the majority predicting $90,000.
Will Bitcoin in 2024 reach new highs? What “bull market engines” have emerged for Bitcoin?
Summarizing the major events that have affected the price of Bitcoin in the cryptocurrency market, such as the continuous outbreak of the Bitcoin ecosystem and the approval of spot ETFs, is this halving a positive or negative influence? Will it bring a bigger bull market? Bitpush News has already made predictions:
$450,000 per coin! BTC/CNY hits a new all-time high. Will Bitcoin experience a crash or a bull market after the halving?
And ECOINOMETRICS predicted last week that if Bitcoin follows a similar growth trajectory after halving as in previous cycles, we will see Bitcoin prices ranging from $140,000 to $4.5 million per coin.
Conclusion
With less than 24 hours remaining until the Bitcoin halving, this may be the first (or second) time that the majority of practitioners and investors in this round have witnessed and experienced the “grand event” of Bitcoin halving. How do you think the halving and the current cycle of Bitcoin will develop? Feel free to comment and discuss.
Tags:
BRC
CKB
Ethereum
Bitcoin
Bitcoin halving
Source link:
https://mp.weixin.qq.com/s/7PckVSPlxTMjAteIrYOOwg
Note: The content of Bitpush articles represents the author’s views and does not constitute investment advice.
Original article link:
https://www.bitpush.news/articles/6622890
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