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The Bitcoin bull cycle is far from over

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A potential Bitcoin bull cycle has been caught between investors’ crosshairs since the start of 2024 as investment inflows increased and the ‘halvening’ approached. Around one month ago, however, between the 19th and 21st of March, Bitcoin took a 13% nosedive in value to trade at around $60,000. Supposedly caused by overheated market conditions, the drop was not uncharacteristic of the pre-halving period. While some feared this was the end of Bitcoin’s bull cycle, recent research by analysis reveals otherwise. 

Bitcoin halvings have always been associated with an uptick in BTC’s value. Standard Chartered even raised its estimates of BTC’s price from $100,000 to $150,000 in 2024 based on the impressive performance of the spot Bitcoin exchange-traded funds. With the 2024 Bitcoin halving event now behind us (miners’ reward halved to 3.125 BTC on April 20th), what can we expect from the market over the coming months? 

What happened on April 20th?

On the 20th of April 2024, the Bitcoin block fee paid to miners was reduced from 6.25 to 3.125 BTC. The recent halving slipped under the radar for many as BTC’s value remained largely stable, but that does not mean a trend will not ensue. Bitcoin’s tokenomics, which employs a deflationary mechanism, is likely to have a long-term impact on the coin’s value over the coming months. In the thirty days prior to the halving, crypto exchanges registered an increase in trading volume, which is typical of other pre-halving periods, as traders and investors shifted their assets to prepare for a potential Bitcoin bull cycle. While the market adjusts to new dynamics and Bitcoin’s price remains relatively steady, investors are keen to see how the cryptocurrency’s price will be impacted.

The impact of the halving on investors

Analysts predict Bitcoin’s value will rise following the recent halving event, albeit a gradually increasing trend that plays out over the next few months. Despite expectations for higher prices, Bitcoin has remained relatively stable since the halving, and past trends suggest a bull cycle will emerge over a series of months instead of weeks, as some investors may have hoped. Global factors such as geopolitical tension and uncertainty regarding U.S. macroeconomic outlooks may keep prices steady in the short term. As such, analysts call for patience amid a more complex investment environment compared to just a few years ago and encourage crypto enthusiasts to view the halving as part of a long-term investment strategy.

The impact of the halving on miners

The first people in the crypto sphere to feel the impact of the halving are the miners. As we mentioned above, their reward, or ‘pay,’ for verifying Bitcoin transactions has just been cut from 6.25 to 3.125 BTC. In order to cushion this blow, some of the world’s largest publicly traded mining companies expanded their businesses prior to the halving. Smaller private companies, however will be put under more pressure, unable to sustain profitability given their limited scope for growth. While the halving could lead to significant returns for investors, even if they are long-term, it could lead to significant losses or even bankruptcy for miners who cannot stay afloat following the event. Bitcoin mining requires a huge amount of energy, meaning smaller miners must become more efficient as fewer Bitcoins are released into the network. 

With around 116 years still to go until all 21 million coins have been released onto the network, the debate surrounding the impact of Bitcoin halving will continue long into the future. In order to find out what happens in this post-halving period, as analysts suggest, only time will tell as investors settle in for a potentially slow but steady Bitcoin bull cycle.  To learn more about all things crypto, trading, and decentralized finance, visit www.forumpay.com/blog.

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ForumPay does not disclose financial advice. Anything shared is strictly to inform, entertain, or share thoughts and ideas. Please seek a registered financial advisor if you are looking for financial advice.

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