Crypto mining stocks and crypto prices don't necessarily move in unison, but generally speaking, if crypto is doing well, so are the miners.
That was the dynamic this week, as the 2024 Great Crypto Rally moved forward at full speed and miners joined in. According to data from S&P Global Market Intelligence. clean spark (CLSK -8.22%) It has risen nearly 9% over this period. crypto mining (CIFR -3.38%) almost 12% progress; hut 8 (hut 11.97%) had a very good trajectory with a gain of just under 27%.
Halving should increase demand for Bitcoin
We're pretty close to the latest half-life. Bitcoin (BTC -0.00%). For those unfamiliar, a halving is an event where the reward for mining a cryptocurrency is halved.
The main purpose of a halving, especially in the case of Bitcoin, is to reduce the supply of coins or tokens, which will eventually be capped at 21 million coins. A coin halving occurs every time 210,000 blocks representing a set of transactions are created.
Specifically, miners will receive 3.125 Bitcoins for each new block on the completed chain, up from the current 6.25 Bitcoins. Most likely, the halving will occur at some point in April.
As any investor in any type of asset well knows, when the supply of a desirable good, service, or investment decreases, demand tends to increase. This is the basic formula for price increases.
Therefore, it is not surprising to learn that the price of Bitcoin has increased significantly immediately after the last three halvings. The most recent event in May 2020, six months after the event, saw Bitcoin price increase by 79%. One year after the halving, the stock rose an astonishing 547%.
following the leader
Of course, we've all heard the warning that there are no guarantees in the world of investing, and past performance does not guarantee future success. But at the moment, Bitcoin and its related assets look like a very solid bet.
Flows into spot Bitcoin exchange-traded funds have subsided, but their coffers are still bulging and supporting the rise in Bitcoin prices. The U.S. and global economies continue to have strong tailwinds, inflation is becoming less of a concern by the day, and Federal Reserve officials appear determined to cut interest rates, albeit not right away.
Finally, for many investors, Bitcoin is not only the leading asset in the cryptocurrency space. It's the only thing they're willing to buy. Investing in these spot ETFs is quick and easy.
All of this greatly supports the work of Bitcoin miners. As long as investors continue to believe in Bitcoin, the prices of these digital earth drillers should continue to defy gravity.
