Bitcoin BTJ24 enthusiasts were looking forward to Friday's Bitcoin “halving.” This is a change to the cryptocurrency's underlying technology designed to slow down the rate at which new Bitcoins are created.
Halvings, which occur approximately every four years, were written into the original Bitcoin code by pseudonymous creator Satoshi Nakamoto as a way to slow down the rate of Bitcoin creation.
Chris Ganatti, global head of research at WisdomTree, an asset management company that sells Bitcoin exchange-traded funds, called the halving “one of the biggest events in the crypto industry this year.”
According to CoinGecko’s countdown clock, the halving is scheduled to occur in the early hours of Greenwich Mean Time (GMT) on Saturday.
For some crypto enthusiasts, the halving will emphasize Bitcoin's value as an increasingly rare commodity — Nakamoto has capped Bitcoin's supply at 21 million tokens — while , skeptics believe that halving is just a technical change talked about by speculators to drive up the price of cryptocurrencies.
This halving works by halving the rewards that crypto miners receive for creating new tokens, making it more expensive to put new Bitcoin into circulation.
This comes after the price of Bitcoin soared to an all-time high of $73,803.25 in March, spending much of 2023 slowly recovering from the dramatic drop in 2022. On Thursday, the world's largest cryptocurrency was trading at $63,800.
Bitcoin and other cryptocurrencies have been buoyed by excitement over the U.S. Securities and Exchange Commission's decision to approve a spot Bitcoin ETF in January and expectations that central banks will cut interest rates.
Previous halvings occurred in 2012, 2016, and 2020. Some crypto enthusiasts have pointed to the subsequent price increase as a sign that Bitcoin's next halving will push prices higher, but many analysts are skeptical.
Analysts at JPMorgan said this week: “We don't expect Bitcoin prices to rise after the halving, as it's already priced in.”
They expect the price of Bitcoin to fall after the halving. That's because Bitcoin is “overbought” and venture capital funding to the crypto industry has been “subdued” this year.
Financial regulators have long warned that Bitcoin is a high-risk asset with limited real-world applications, but there is a growing movement to approve trading products linked to Bitcoin.
“I’m a little skeptical about the lessons we can learn from past halvings in terms of price prediction,” said Andrew O’Neill, a cryptocurrency analyst at S&P Global.
“It's just one of many factors that drive the price,” he said.
Bitcoin has struggled for direction since its all-time high in March, with geopolitical tensions and expectations that central banks will continue to raise interest rates amid lingering turmoil in global markets. It fell within the week.
