While the impact of Bitcoin halving is very obvious for Bitcoin, it is difficult to predict for altcoins. Bitcoin's creator, Satoshi Nakamoto, intentionally introduced the concept of Bitcoin halving to compensate for Bitcoin's shortcomings in terms of inflation and network demand.
However, he probably never imagined the impact Bitcoin halving would have on altcoins. In this blog, we will discuss whether Bitcoin halving is a gift or a curse for altcoin performance.
Impact of Bitcoin halving on altcoins
Analyzing the impact of the Bitcoin halving requires considering multiple factors. Additionally, factors such as tokenomics, market sentiment, token demand, community support, and USP are essential to predicting altcoin price performance in the post-halving situation.
Cryptocurrency market sentiment
Bitcoin plays an important role in determining market conditions and controlling bullish and bearish states of the market. This is called Bitcoin dominance, and it is currently at a three-year high.
Currently, the Fear and Greed index is 55, which is halfway between the Greed and Fear zones. The market has also entered a correction zone after months of bullish activity.
During these bullish months, Bitcoin soared to an all-time high of $73,750.07. As of now, the price of Bitcoin has fallen by about $61,000, causing a decline in the entire cryptocurrency market.
Based on this relationship and the history of Bitcoin halvings, it is understood that Bitcoin halving will lead to a bull market and eventually the altcoin market will also rise.
The crypto market and market sentiment are confident that an altcoin boom will occur in the coming months.
Altcoin price fluctuations
Altcoins like Ethereum are closely linked to Bitcoin movements. Ethereum's price has also fallen in line with Bitcoin, currently trading at $2,973.08. A similar spike pattern could occur after the halving, when Bitcoin prices skyrocket.
Looking into the situation of Ethereum during past halvings, there were no large price differences during the second halving in 2016. At the time, Ethereum was trading between $12 and $15, but no major price spikes occurred during the first six months of the halving. Even if Bitcoin continues to rise.
The third quarter of May 2020 was completely different from the second half, with both Bitcoin and Ethereum increasing in price, eventually hitting all-time highs in November 2021.
The same is true for most altcoins, including Solana. Solana has a different ecosystem and different meme coin customers. It is assumed to be independent from other networks. However, looking at the graphs of Bitcoin and Solana, it is undeniable that they have similar price movements.
Currently, Solana is in a correction zone with its price at $130.92 after facing a 35% drop in one month.
Key factors that caused past half-life spikes
At the time of the second halving, six months after the Bitcoin halving, Ethereum price started an upward trend. That was due to the introduction of the Initial Coin Offering. In other words, the driving force behind Ethereum's sudden rise was not the halving but the ICO.
Similarly, during Bitcoin's third halving in 2020, interest rates were zero due to the coronavirus pandemic. Therefore, even back then, it took another economic force to push altcoin prices up.
Is the Bitcoin halving a gift to altcoins?
Based on the price history of altcoins during past halvings and similar economic events in 2024, we also expect price spikes in the case of altcoins. Financial factors for 2024 include the Ethereum ETF, US inflation, and improved crypto regulation that will play a key role in supporting the post-halving bull market.
You should also note that many other factors can affect altcoin prices. As a result, the timing of this bull market may be different than previous ones.
Looking at past charts, no post-halving bullish zone occurred immediately after Bitcoin's halving. We need to determine how long an altcoin investor will have to HODL to find the desired market.
Read more 3 signs of a virtual currency market crash after Bitcoin halving
