With the imminent Bitcoin (BTC) halving just around the corner, experts are speculating on how this event could impact the cryptocurrency’s status as a store of value.
As of now, there are approximately 630 blocks left to be mined before the Bitcoin halving takes place, which is expected to occur around April 19. Back in March, the price of BTC reached an unprecedented high of over $73,000 after the United States Securities and Exchange Commission gave the green light for the listing and trading of spot Bitcoin exchange-traded funds on exchanges in January. Since then, the price of this crypto asset has continued to exhibit volatility.
Many crypto users and financial analysts argue that Bitcoin could serve as a valuable hedge against inflation, particularly as central banks, including the U.S. Federal Reserve, continue to devalue fiat currency by printing money. In contrast, Bitcoin has a fixed supply of 21 million coins, with approximately 19.7 million already in circulation.
On April 19, the halving will mark the fourth time in Bitcoin’s history that this event has occurred, with the previous one taking place in May 2020. This halving will reduce the block reward for miners from 6.25 BTC to 3.125 BTC. Consequently, the inflation rate of Bitcoin will be cut in half, dropping from around 1.7% to 0.85%. This will decrease the new supply of the cryptocurrency, potentially leading to a price increase if demand remains steady or rises.
It is worth noting that all previous BTC halving events have ultimately resulted in price hikes. In the United States, many individuals already utilize Bitcoin as a safeguard against inflation, while people in countries experiencing hyperinflation, such as Argentina, may also turn to this digital asset.
“It’s becoming increasingly evident that Bitcoin and other digital assets offer more than just a means of payment with crypto for users,” stated Marcos Nunes, the CEO of Gnosis Pay. “Instead, these assets serve as a lifeline for millions of people around the world who reside in countries plagued by economic turmoil and hyperinflation.”
The manner in which countries adopt or regulate Bitcoin can have a significant impact on its price. Analysts closely monitor the regulatory approach taken by the United States at both the state and federal levels, as this country is responsible for roughly one-third of all mining activities.
Following the halving, the greater scarcity of Bitcoin is expected to enhance its appeal as a store of value for crypto users. Additionally, many are speculating on how Bitcoin will compare to gold after this event. While gold has traditionally been considered a more conventional store of value for traders who may not be interested in cryptocurrencies, this dynamic could potentially change.
According to Sinz 21st.Capital, Bitcoin’s price volatility is unlikely to change in the near future. However, its inflation rate is anticipated to once again fall below that of gold, as gold miners will increase the percentage of the gold supply at a faster rate than crypto miners will increase the percentage of the Bitcoin supply. Notably, prominent gold advocate Peter Schiff has yet to directly address this issue on social media, instead focusing his recent posts on the price of Bitcoin.
Based on the upcoming halving and historical data, it is projected that the final BTC block reward will not occur until the year 2140, more than a century from now. At that point, as outlined in the Bitcoin white paper, miners will solely rely on transaction fees as an incentive, with all 21 million coins having been mined.
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