The cryptocurrency ecosystem is gearing up for the so-called Bitcoin halving, scheduled for around April 20th. The halving, which occurs every four years, is expected to further increase Bitcoin's price. Historically, these have led to higher prices, and experts said this year will be no different.
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But experts said it remains to be seen whether Bitcoin's rise and the hype surrounding the halving will lead to a sustained rally in the small coin.
Bitcoin hit an all-time high of $69,044.77 last month. The asset is currently experiencing significant volatility ahead of its halving, but many experts expect it to reach $100,000 this year.
As of April 8, Bitcoin was hovering around $72,000, up a whopping 156% over the past year.
Meanwhile, some altcoins have also benefited from Bitcoin's recent resurgence, largely due to the Securities and Exchange Commission's (SEC) approval of the Spot Bitcoin exchange-traded fund, which has led to significant There is interest and institutional recognition of this asset.
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Bitcoin ETF and Meme Coin
As of March 1, 10 U.S. Bitcoin spot ETFs had more than $48 billion in assets under management, according to Digital Asset Research.
As Messari's April 4 report noted, the approval of the Bitcoin ETF sent BTC back to unprecedented levels and “ignited a resurgence of meme coins that outperformed many sectors.”
According to the report, “This resurgence highlights both legacy tokens such as DOGE and SHIB, which have risen over 100%, and newer tokens such as PEPE and WIF, which have soared over 600%.” Since most meme tokens are traded strictly on-chain, data analysis helps identify trends and momentum, helping investors distinguish between tokens with lasting potential and those destined for short-lived popularity. It helps.”
However, many experts argued that because the halving is specific to Bitcoin, the impact on other digital assets before the event may not be noticeable.
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faithful to the basics
“I believe in keeping things simple and staying within your capabilities,” says Cash Square co-founder Vijay Maloria. “Therefore, I recommend Bitcoin and Ethereum.”
Malloria said this is where institutional demand will grow the fastest, but also where there will be the most liquidity.
“For long-term investors, the stars seem to be aligning and I would buy on the spurt,” he said. I think that there.”
Other experts agreed, arguing that Bitcoin would be the only cryptocurrency directly affected by the halving.
“Other cryptocurrencies that rise during this period are also due to correlation and not due to fundamental changes in the ecosystem,” said Peter Eberle, president and chief investment officer at Castle Funds. “If you want to speculate on higher prices, the only real option is to buy Bitcoin.”
Pay attention to the movement after the half-life
Currently, altcoin prices may fluctuate further after the halving. As explained by Brian Dixon, CEO of Off The Chain Capital, halving is unique to the Bitcoin protocol, so certain digital assets may directly benefit as a result of Bitcoin halving. is difficult to target.
“However, in past cycles, the overall digital asset market has generally performed well in the 12-18 month period following a halving,” he said.
According to him, one of the factors driving this phenomenon is that Bitcoin holders believe their holdings will increase in value, so they start trading their profits into other digital assets, thereby increasing the performance of altcoins. It is said that there is a possibility that it will rise.
Additionally, Dixon said newcomers to Bitcoin could see the value of their holdings increase, and people may become interested in other digital assets.
However, he urged investors to learn about important sectors of the digital asset market, such as smart contracts, an important sector that is rapidly growing and evolving with interesting use cases.
“The Ethereum protocol is the best known for this purpose,” Dixon said, but because Ethereum is cheaper, faster and more efficient, it has lost market share to competing protocols such as Solana and Binance Smart Chain. He pointed out that people's lives are being taken away from them.
“The increase in application and developer activity on Solana and BSC shows that Ethereum is far from a long-term winner in this space, and they are working to accelerate adoption of the protocol. ” he added.
Regarding meme coins, Dixon advises people to “stay away from meme coins as they are speculative and have no real utility other than hype and brand appeal.”
“I see this sector as similar to the hype surrounding new coin offerings (ICOs) in the 2016-17 crypto bull cycle and NFTs in the 2020-21 bull cycle,” he said. said. “Back then, bags were very popular, but then these sectors collapsed and many people were left with worthless bags.
“To me, the meme coin craze exhibits all of these same characteristics. A few people may get lucky at the right time. But in my opinion, most people aren't that lucky. Sho.”
GOBankingRates Details
This article originally appeared on GOBankingRates.com: Which cryptocurrencies should you invest in ahead of the Bitcoin halving?
