Pepperstone's countdown to the halving of Bitcoin (BTC) is well underway. The timer shows just 8 days until miners' rewards are cut in half.
What do traders need to know about this event? According to Pepperstone, the halving directly affects the Bitcoin ecosystem, causing all speculation in the secondary market, where traders buy and sell freely on cryptocurrency exchanges and OTC through the use of derivatives (such as CFDs).
Since mining will no longer be profitable for smaller and less efficient miners who have limited cost-cutting options or smaller cash reserves, they are likely to cease operations after a halving event, which will inevitably increase the real burden on the Bitcoin mining community.
Over time, larger players will take over the market, which could be a positive thing in theory, but it could also lead to concentration risk – fewer players getting more rewards – which will affect hashing rates and reduce trust in the system.
However, in the short term, the underlying economics work. The halving of the Bitcoin price will lead to a reduction in supply against a backdrop of strong and growing demand, which will cause the price of Bitcoins to rise.
This does not mean that we will see a sudden explosion and impulsive upward movement of the Bitcoin price immediately after the halving. Historical data show that in previous events (November 2012, July 2016, May 11, 2020), the value of the major cryptocurrency increased by about 6% in the 10 days after the halving.
But in the medium term, experts predict higher levels. Perhaps the halving will be the catalyst that triggers the development of a new trend. The market reaction to the flow of capital works in favor of investors and traders.
Since the halving will significantly affect supply and demand dynamics, future price behavior will also change. Of course, we may also see the realization of the "sell on the facts" scenario, but in any case, there will be changes next week that all crypto traders are watching with increased attention.
Further reading: Analysts predict a new rally for altcoins
