Kaiko Research recently put out a new report suggesting the bitcoin halving set to occur in 2024 isn’t going to aid the world’s number one digital currency.
Kaiko Research on the Upcoming BTC Halving
There have been many BTC halving events over the years. 2016 and 2020 were big ones, and each time, without fail, they have helped bitcoin along its journey in reaching new price highs. During each of those years, bitcoin reached new price pinnacles that had investors and traders salivating, but according to Kaiko Research, this time around will be different, and fans shouldn’t expect bitcoin to strike gold like it has during previous halvings.
Researchers state that while price jumps have occurred with each event, they’ve gradually diminished over time, and thus when 2024 comes around, things are going to be so small that a jump may not even be noticeable. In their report, the analysts explained:
Before previous halvings, BTC saw significant volatility in the months leading up to the event. However, so far, there hasn’t been a notable increase in leverage or trade volumes, which may indicate that traders are not heavily positioning for the upcoming halving at this stage.
A halving refers to a period in which bitcoin rewards for miners extracting new units from the blockchain and adding them to circulation drop by half, hence the world “halving.” They’re reduced by 50 percent, and while this works to ensure bitcoin retains a certain degree of rarity and keeps a strong position in the crypto market, miners ultimately wind up eating the rotten end of the stick. They must work just as hard to give new crypto units life on the blockchain, but they don’t earn as much for their efforts.
This creates a serious array of problems, one being that many miners could likely retire from the industry. In halving to spend more on equipment due to inflation and related economic problems while getting a lot less cash for their energy and time, they’re likely to turn their attention to other endeavors, leaving bitcoin to fend for itself. This would undoubtedly lead to the death of the industry should too many miners step away.
The analysts at Kaiko further explained that price diminishments have occurred with similar tokens that endure halvings, a big example being Litecoin. They said in their report that in the LTC halving events of 2015 and 2019, the price jumps incurred by the token have been relatively slim, and things aren’t likely to be big and boisterous like they once were.
Litecoin Has Fallen Victim to This Trend
This suggests that halvings [for Litecoin] have been ‘buy the rumor, sell the news’ events rather than significant price catalysts.
They further stated that this same trend will, in 2024, likely set in for bitcoin.