The “halving,” which occurs approximately every four years for Bitcoin, the largest cryptocurrency in the world, ended on Friday, according to CoinGecko, a data and analysis company for cryptocurrencies.

After that, Bitcoin was comparatively stable, dropping 0.47% to $63,747.

The “halving” of bitcoin, a modification to the underlying technology of the cryptocurrency intended to slow down the creation of new bitcoins, was much anticipated by fans.

When bitcoin was first established, its developer, Satoshi Nakamoto, went by pseudonym, and included a halve into the code to slow down the creation pace of new bitcoins.

The halving was dubbed “one of the biggest events in crypto this year” by Chris Gannatti, global head of research at asset manager WisdomTree, which promotes exchange-traded funds for bitcoin.

The halving will highlight bitcoin’s value as an increasingly rare commodity, according to some cryptocurrency enthusiasts. Bitcoin’s quantity was limited by Nakamoto to 21 million tokens. However, detractors perceive it as little more than a technological modification that traders have fabricated to drive up the value of the virtual money.

In order to make it more costly for miners to create new bitcoins, the operation halves the payments that miners receive for creating new tokens.

The price of bitcoin saw a significant upswing, reaching an all-time high of $73,803.25, in March 2023, after a sharp decline in 2022. The largest cryptocurrency in the world was trading at $63,800 on Thursday.

Excitement surrounding the U.S. Securities and Exchange Commission’s January approval of spot bitcoin exchange-traded funds and anticipations of interest rate cuts from central banks have bolstered bitcoin and other cryptocurrencies.

In November of last year, a jury found the former millionaire and creator of a now-defunct cryptocurrency exchange guilty of stealing $8 billion from FTX customers. According to the prosecution, this was one of the worst financial frauds in American history.

There have been three prior halvings: in 2012, 2016 and 2020. Although many analysts are doubtful, some cryptocurrency enthusiasts point to price rises that preceded them as evidence that bitcoin’s next halving will raise its price.

Analysts at JP Morgan stated this week, “We do not expect bitcoin price increases post-halving as it has already been priced in.”

Since bitcoin is “overbought” and venture capital funding for the cryptocurrency business has been “subdued” this year, they anticipate a decline in price following the halving.

Financial authorities have long cautioned that bitcoin is a high-risk investment with few practical applications, but more are starting to accept trading items that are connected to the cryptocurrency.

S&P Global cryptocurrency analyst Andrew O’Neill expressed his scepticism about the lessons that can be learned about price prediction from past halvings.

“It’s only one factor in a multitude of factors that can drive price,” he stated.

Bitcoin has battled for direction since March’s record high and plummeted in the previous two weeks as geopolitical concerns and predictions that central banks will hold rates higher for longer unsettled global markets.

(Adapted from BusinessTimes.com.sg)

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