Investors are searching for signals that could show Bitcoin (BTC) could enter a new bull market. One of these signals is related to the halving event that is expected to take palace as soon as next year. The halving event creates a narrative in the market in which investors believe that Bitcoin could move higher. Let’s get into the details of how the halving event works.
Could Bitcoin Move Higher With the Upcoming Halving Event?
The halving event is one of the most important things about Bitcoin and the whole cryptocurrency market. Why? Simply because the new issuance of Bitcoin gets reduced by 50%, something that many investors consider bullish. But how could this have an impact on the cryptocurrency market?
Investors look at the halving event as the possibility for Bitcoin to move higher. There are two possibilities. The market anticipates the halving event and creates a bull run before the halving event takes place. This pushes Bitcoin higher the year before the halving and starts a sell-off after the event takes place.
The second option includes Bitcoin moving higher right after the event takes place. The mechanics for this case involves Bitcoin reducing its new issuance by 50% and creating a supply shock. This supply shock would make BTC demand increases more difficult to be absorbed.
In the past, we have seen multiple things happening during halving events. In 2020, when the last halving event took place, Bitcoin moved from $3,200 in December 2018 to $8,100 in early 2020. This shows that there could be a new push higher in the future (especially in 2023).
Now, we could also see Bitcoin moving higher when the halving event will take place. In 2020, after May, when Bitcoin halved its new issuance by half, the market reacted positively and it moved above $12K for the first time in many years. Additionally, this was the moment when the bull market started and pushed BTC to the top in November 2022.
Does this mean that the same will happen in the future? Of course, we cannot. We cannot predict what could happen with Bitcoin and where the price of the largest cryptocurrency will be in the future. But we should know that there will be a halving event in 2024 that could eventually have an impact on the market.
Bitcoin’s new issuance will fall from 6.25 BTC now to 3.125 BTC as soon as next year. There is no coming back. There will never be 6.25 BTC per block rewarded to miners. Fees will become more important than ever before, and miners will have to also secure the network with a lower amount of BTC to be rewarded for them.
We could get a surprise next year if we see that Bitcoin starts recovering from the current bear market. Let’s not forget that Bitcoin has been traded in a bear trend since November 2021 and we do not know if we have bottomed yet or not.
At the time of writing this article, Bitcoin is being traded at $17,500 and it has a market capitalization of $337 billion.