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CoinDesk reports:
Multiple factors are making the upcoming April Bitcoin halving the most anticipated halving in cryptocurrency history.
The previous three Bitcoin halvings occurred on November 28, 2012, July 9, 2016, and May 11, 2020. This time, the halving comes after the Securities and Exchange Commission (SEC) approved the first-ever spot Bitcoin exchange-traded fund (ETF) in the United States, greatly increasing the hype surrounding the event.
The ETF is not the only factor raising expectations. Julian Grigo, creator of SafeWallet and institutional and fintech manager at Safe, told Cointelegraph that the Bitcoin halving serves as an important reminder, highlighting the differences between Bitcoin and fiat currency.
This Bitcoin halving occurs amid global inflation higher than the average level.
"It's a fixed supply plan that no one can change. In this regard, Bitcoin and other cryptocurrencies stand in stark contrast to fiat currencies issued by nation-states. However, this limited supply is even more pronounced for Ethereum ($4,060) at the moment," he said.
"Bitcoin's supply is still growing, just at a slower pace. In contrast, Ethereum's supply is actually decreasing. From this perspective, Ethereum can be seen as a better store of value... Therefore, if Ethereum benefits more than Bitcoin from the halving event, I wouldn't be surprised," he said.
Market volatility and price spikes
Joey Garcia, director of Xapo Bank and head of public affairs, policy, and regulation, told Cointelegraph he expects the halving to have a positive impact on Ethereum and the broader market.
Garcia said, "The mechanism aims to mimic the scarcity and deflation aspects of precious metals." He added, "The indirect effects on Ethereum and the broader market are interesting.
He said the halving could have a positive impact on market sentiment and "lead to more resources and innovation flowing into the broader ecosystem, including Ethereum."
The scarcity Garcia refers to is the reduction of mining rewards from 6.25 BTC to 3.125 BTC. Of course, this is expected to put greater pressure on Bitcoin's supply side.
Alun Evans, co-founder of the Laos Network, a first-layer general-purpose digital asset network, told Cointelegraph, "Although this event directly affects Bitcoin, its impact extends across the entire cryptocurrency ecosystem, including Ethereum."
The decrease in the supply of new coins entering the market may lead to scarcity. If Bitcoin's price rises after the halving, the prices of Ethereum and other cryptocurrencies may also rise as investors diversify their portfolios.
This may not be entirely positive news as many people think. A rapid increase in ETH prices may have some negative consequences. A skyrocketing Ethereum price is not entirely favorable. While Bitcoin primarily serves as a digital store of value or payment method, Ethereum supports various applications and smart contracts.
Therefore, a more volatile and unpredictable market may make Ethereum less suitable for users and developers. This is a challenge Ethereum developers must address in the next bull market cycle.
"With the increase in Ethereum network costs, we will continue to see alternative Layer 1 and Layer 2 scaling solutions (such as Multi-Ethereum Virtual Machine superchains) to improve network scalability and reduce transaction costs, making it more accessible and cost-effective for users and developers," Evans said.
Is it the halving or something else?
While some attribute positive market behavior to Bitcoin and the halving, others point out other factors. Due to investors' expectations of a supply reduction event in the coming weeks, Bitcoin will continue its parabolic rise. "Looking at the stable inflow of Bitcoin ETFs, there are three core catalysts driving net positive market behavior: Ethereum's Dencun upgrade in March, Bitcoin's halving in April, and the prospect of SEC approval of spot Ethereum ETFs in May.
However, despite most analysts focusing on the positive momentum of Bitcoin's rise, Llaurado predicts Ethereum may suffer losses in the short term.
"With Bitcoin soaring to historic highs, liquidity has temporarily withdrawn from Ethereum and other altcoins. Once attention shifts to the potential of Ethereum ETFs, liquidity will retract from its high and consolidate, leading to a macro bullish outlook.
"With the huge momentum of Bitcoin's price surge driven by the resurgence of interest in cryptocurrency, significant industry milestones from Ethereum's Dencun upgrade in March to Bitcoin's halving in April and the possible launch of Ethereum ETFs in May have ignited excitement across the board," Alexander told Cointelegraph.
Alexander added, "These events were foreseeable and largely priced in."
Nevertheless, Alexander still believes that both Bitcoin and Ethereum are good long-term investments.
Aki Balogh, co-founder and CEO of DLC.Link, a Web3 infrastructure that allows Bitcoin holders to self-wrap and participate in decentralized finance, told Cointelegraph that he is very bullish on Bitcoin because the halving, Ordinals, and MicroStrategy "monopolize the market," all of which "further reduce supply."
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Many hedge traders trade ETH and other tokens against BTC rather than the US dollar to minimize [foreign exchange] risk. Therefore, if BTC rises, there will be a secondary effect of increasing the value of ETH and other tokens. The Bitcoin halving is an amplifier for cryptocurrency as a new asset class, but the echo of Ethereum may be the loudest. |
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Post time 20-3-2024 09:34:24