Crypto fans countdown to bitcoin’s ‘halving’, designed to cut rate of creation of new digital currency

Bitcoin enthusiasts were eagerly waiting for bitcoin’s ‘halving’ on Friday [today], a change to the cryptocurrency’s underlying technology designed to cut the rate at which new bitcoins are created.

The halving, which happens roughly every four years, was written into Bitcoin’s code at its inception by pseudonymous creator, Satoshi Nakamoto, as a way to reduce the rate at which bitcoins are created, according to Reuters.

Previous halvings occurred in 2012, 2016 and 2020.

Global Head of Research at Asset Manager, WisdomTree, Chris Gannatti, which markets bitcoin exchange-traded funds, called the halving “one of the biggest events in crypto this year.

According to CoinGecko’s countdown clock, the halving was scheduled to happen in the early hours of Saturday.

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For some crypto fans, the halving would underscored bitcoin’s value as an increasingly scarce commodity – Nakamoto capped bitcoin supply at 21 million tokens – while sceptics see it as little more than a technical change talked up by speculators to inflate the virtual currency’s price.

The halving works by halving the rewards cryptocurrency miners receive for creating new tokens, making it more expensive for them to put new bitcoins into circulation.

It follows a surge in bitcoin’s price to an all-time high of US$73,803.25 in March, having spent much of 2023 slowly recovering from 2022’s dramatic plunge.

On Thursday the world’s biggest cryptocurrency was trading at US$63,800.

Bitcoin and other cryptocurrencies have been supported by excitement around the United States Securities and Exchange Commission’s decision to approve spot bitcoin exchange-traded funds in January, as well as expectations that central banks will cut interest rates.

Some crypto fans point to price rallies that followed them as a sign that bitcoin’s next halving will boost its price, but many analysts are sceptical.

“We do not expect bitcoin price increases post halving as it has been already priced in,” JP Morgan analysts wrote this week.

They expect bitcoin’s price to fall after the halving, because it is “overbought” and venture capital funding for the crypto industry has been “subdued” this year.

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