Bitcoin 'halving' has taken place, CoinGecko says

Bitcoin's halving event: Bitcoin, the world's foremost cryptocurrency, underwent its "halving" event on Friday, as reported by CoinGecko, a cryptocurrency data and analysis firm.

Following the halving, Bitcoin exhibited relative stability, experiencing a minor decrease of 0.47 per cent to $63,747.

Enthusiasts of Bitcoin had eagerly anticipated the halving, a periodic occurrence roughly every four years, designed to reduce the pace at which new bitcoins are generated.

Bitcoin's built-in halving

The concept of halving was ingrained into Bitcoin's code from its inception by the pseudonymous creator Satoshi Nakamoto, as a mechanism to slow down the creation of bitcoins.

Chris Gannatti, the global head of research at asset management firm WisdomTree, which offers Bitcoin exchange-traded funds, described the halving as "one of the major events in the crypto world this year."

For some proponents of cryptocurrencies, the halving reinforces Bitcoin's value as a progressively scarce asset. Nakamoto imposed a limit of 21 million tokens for Bitcoin. However, skeptics view it merely as a technical adjustment hyped by speculators to inflate the virtual currency's value.

The halving process involves reducing the rewards granted to cryptocurrency miners for producing new tokens, thereby increasing the cost of introducing new bitcoins into circulation.

Bitcoin price recovery

This event follows Bitcoin's price surge to an all-time high of $73,803.25 in March, having steadily recovered throughout 2023 from the significant downturn experienced in 2022. As of Thursday, the largest cryptocurrency was trading at $63,800.

The excitement surrounding the approval of spot Bitcoin exchange-traded funds by the US Securities and Exchange Commission in January, as well as expectations of interest rate cuts by central banks, has provided support to Bitcoin and other cryptocurrencies.

Historically, halvings occurred in 2012, 2016, and 2020, with some crypto enthusiasts pointing to subsequent price rallies as indicators that Bitcoin's price will rise following the current halving. However, many analysts remain sceptical.

JP Morgan analysts, for instance, do not anticipate a post-halving increase in Bitcoin's price, asserting that it has already been factored into the market. They foresee a potential decline in Bitcoin's price due to being "overbought" and subdued venture capital funding in the crypto sector this year.

Regulators back Bitcoin

While financial regulators have cautioned about the high-risk nature of Bitcoin as an asset with limited real-world utility, they have increasingly approved Bitcoin-linked trading products.

Andrew O'Neill, a crypto analyst at S&P Global, expressed scepticism about drawing concrete price predictions solely from previous halving events, emphasising that various factors influence cryptocurrency prices.

Bitcoin has faced uncertainty since reaching its record high in March, with recent declines attributed to geopolitical tensions and expectations of prolonged higher interest rates by central banks unsettling global markets.

(With Reuters Inputs)