The latest Bitcoin halving has occurred, marking the fourth instance of this event, but this one stood out from the previous ones due to significant involvement of institutional investors.
Bitcoin price typically rises following a halving event. Historically, this pattern has held true for each bitcoin halving.
The fourth Bitcoin halving in 2024 may not proceed similarly to previous ones, as certain aspects have already varied within the community.
Crypto user base up at least 400% since the 2020 halving
Since the initial Bitcoin production rate decrease from the first halving, the desire for it among users hasn’t remained stagnant.
After the Bitcoin halving in May 2020, approximately 400 million new users have joined the worldwide cryptocurrency community, according to multiple reports.
In the year 2020, it is estimated that approximately 100 million individuals owned cryptocurrencies worldwide based on data from the Cambridge Centre for Alternative Finance (CCAF). By contrast, by the end of 2023, this number is projected to have grown significantly to potentially reach over 580 million crypto users, according to Crypto.com’s estimates.
Although Bitcoin is the most valuable cryptocurrency globally and was established first, it seems that there are fewer users of Bitcoin compared to the entire crypto community.
Based on Technopedia’s statistics, around 2.7% of the world population, or approximately 219 million individuals, are believed to hold Bitcoin in 2024. This number represents a significant increase from the estimated 71 million Bitcoin users reported by Crypto.com in 2020, representing a roughly 208% growth over a four-year period.
Estimating the number of active users with Bitcoin or most cryptocurrencies can be challenging due to the complexities involved. On-chain transactions don’t always distinguish between long-term investors who haven’t moved their coins for a while, and lost or unused Bitcoins. Factors like privacy tools, wallet consolidation, and other circumstances further complicate matters.
2024 pre-halving Bitcoin rally has not been seen before
In contrast to the previous three Bitcoin halvings, the price experienced exceptional increase prior to the fourth one, which occurred in the year 2024.
Previously, Bitcoin’s price tended to surge after the halving event instead of before it, and typically reached new peak prices around a year following the halving date.
During the last Bitcoin cycle, the price failed to surpass its all-time high of $20,000 before the 2020 halving event. Instead, it reached a new peak ten months after the halving had taken place. However, things look quite different now.
During this latest round, Bitcoin hit new peak prices just prior to the halving process, reaching an unprecedented value of $73,600 on March 13, 2024.
A remarkable surge like this is unprecedented, as confirmed by numerous analysts, among them Simon Peters from eToro.
Miners ‘better shaped’ for halving this time
Before the recent Bitcoin price surge that had never occurred before a halving event, the mining industry may have experienced beneficial effects. Miners were given more power to manage their mining expenses due to this price increase.
According to Chris Kuiper, the director of research at Fidelity Digital Assets, miners seem to be in a stronger financial position than before the last halving. They have lower debt levels and may have more control over their expenses, including electricity costs.
During this mining cycle, the price increase prior to the halving event is an additional advantage for miners. This benefit wasn’t present during earlier cycles.
Starting from May 2020’s third Bitcoin halving, the energy consumption for mining Bitcoin has noticeably risen. It went from approximately 50 Terawatt hours (Twh) to reaching 99 Twh on April 18, 2024.
In the same way, the proportion of Bitcoin network’s energy usage derived from renewable energy has grown. Renewable energy sources accounted for 54.5% of Bitcoin mining consumption by January 2024, as reported by Bitcoin ESG Forecast. Conversely, data from CCAF indicated that only 39% of Bitcoin mining relied on renewable energy sources as of September 2020.
First Bitcoin halving with spot BTC ETFs in the U.S.
The upcoming Bitcoin halving in 2024 brings a unique twist: it’s the first to occur while US-listed Bitcoin exchange-traded funds (ETFs) are available.
Institutional investors gained access to Bitcoin through the introduction of Bitcoin ETFs in January 2024, following decades of attempts to make it a reality.
Based on the analysis of Eric Balchunas from Bloomberg’s ETF team, Bitcoin spot ETFs have experienced remarkable growth in popularity, indicating a significant increase in the desire for Bitcoin investment among traders.
Starting from the initial day of trading, the total of the ten Bitcoin SPOT ETFs collectively added over 220,000 BTC to their holdings, equivalent to approximately $14 billion in value as of now.
Among the ten Bitcoin ETFs offered by BlackRock, the one that holds Bitcoin spots has experienced the greatest inflow of funds. The value of its Bitcoin holdings has seen a staggering increase of over 10,000% – from an initial 2,621 BTC when it began trading to a current amount of 273,140 BTC as of April 18.
M2 CEO Stefan Kimmel said:
Looking at the broader landscape, while halving garners attention, we are cognizant that it’s just a part of a larger narrative. The confluence of ETFs, quantitative easing, and halving will define the future contours of the market.
Bitcoin became more globally decentralized and secure
Since the major portion of new Bitcoins were mined in Mainland China since 2020, the Bitcoin network has become more dispersed and secure.
Four years ago, approximately 80% of Bitcoin’s global mining hash rate came from China. However, by February 2024, the United States had taken over with a 40% share, while China and Russia followed closely behind with 15% and 12%, respectively, according to Jaran Mellerud, the founder of Hashlab Mining.
“Mellerud noted that the trend of geographic dispersal is persisting as miners move to Africa and Latin America in search of lower electricity costs.”
The Bitcoin network has grown stronger against potential assaults due to a fivefold increase in its hash rate since the last halving event.
According to Hashlab Mining’s founder, it now takes five times as much computing power, electricity, infrastructure, and mining equipment to mount an attack on the network.
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2024-04-20 23:00