Another Bitcoin Price Surge?

Bitcoin may be on the verge of another surge!  

So let me explain.

The fourth Bitcoin halving event is expected on April 20, 2024.  And chances are, this will send Bitcoin prices up dramatically!  

I’ll explain what halving is in a minute.  But first, I want to point out that as I’m recording this on April 8, Bitcoin is already over US$70,000.  That’s up 140% in the past 12 months!  So you may be thinking, how much higher can it go? 

This brings us to the concept of halving.

Bitcoin uses blockchain technology to create digital currency. To get Bitcoin, you have to mine it from the blockchain. I have another video that explains how Bitcoin works so make sure you check that out if you want a more in-depth explanation.

Now back when Bitcoin was created in 2009, the reward for each successful mining was 50 coins per block. But the creator also included a protocol where every 210,000 blocks or roughly every four years, the reward gets cut in half. 

This is called Bitcoin Halving.

The first halving was in 2012 when the reward was cut to 25 coins per block. In 2016, it was cut to 12.5 coins.  And in 2020, it went down to 6.25. 

The fourth halving event is expected on April 20, 2024 and will reduce the reward to just 3.125 coins per block. 

The halvings will continue until the total supply of 21 million Bitcoins have all been mined. 

Now I know you’re thinking ‘why do this Halving?’ Why not keep the reward the same? 

Well, it’s all about supply and demand.  Making Bitcoins harder to get creates scarcity, which drives up price.

If the coins are created too quickly and there’s no limit to the number of Bitcoins that can be created, then eventually there will be so many Bitcoins in circulation that they will have very little value. 

But if you limit the supply and how many you can mine at a time, that drives up the price. 

And Bitcoin has already been on a massive bull run recently. Prices surged earlier this year after the launch of Bitcoin ETFs made the cryptocurrency more accessible to investors.

ETF is short for Exchange-Traded Fund. It’s like a basket with a bunch of different securities like stocks, bonds, cryptocurrency and even gold, all in one. It gives investors exposure to various securities without having to buy each individual thing.  You just buy the whole basket and whatever’s in it.

So Bitcoin ETFs give investors exposure to the cryptocurrency with less risk. A Spot Bitcoin ETF gives ordinary investors exposure to the price moves of Bitcoin in their regular brokerage accounts. 

The United States gave the green light to several Bitcoin ETFs early this year, which led to an increase in the price.

Then last month, Spot Bitcoin ETFs had record daily inflows.  While at the same time, the amount of Bitcoin held on centralised exchanges fell to a new low. 

So essentially, the demand for Bitcoin triggered by these new ETFs, is more than the supply of the coin available on the market. And come April 20, the supply will be even less.

Now cryptocurrency is not for everybody.  It is a highly volatile asset class.  Remember it was less than two years ago we were experiencing crypto winter, with Bitcoin prices down as low as $17,000.  The FTX scandal played a big role in that.

FYI, if you missed the news, FTX founder Sam Bankman Fried was just sentenced in March to 25 years in prison!

But the market has clearly recovered.  And this year’s halving event could be a massive opportunity for crypto buyers.

Before I go, let me just remind you that this is NOT financial advice.  Please consult a licensed financial advisor before making investment decisions.

And that’s the bottom line.