The crypto market has high expectations for Bitcoin's future trajectory as it heads towards the upcoming halving. Over the past week, the price and value of the OG cryptocurrency has increased significantly. According to CNBC, while mining Bitcoin, the automatic halving procedure begins once 210,000 “blocks” are created. This occurs approximately every four years and reduces the payment for mining new Bitcoins by half, thus hindering coin production. The next halving event is scheduled to take place in April 2020.
Here are three important things for crypto investors to note before the Bitcoin halving:
Current Bitcoin bull market
The main driver of the price increase for OG cryptocurrencies is the demand for Bitcoin ETFs. However, supply shocks also spurred price increases. At the moment, Bitcoin is in short supply and in excess demand. The upcoming cryptocurrency halving will also change the dynamics of Bitcoin demand and supply. After acquisition, the reward for mining additional blocks will be split in half. In such a situation, the supply of Bitcoin will most likely continue to be lower than the demand. If this trend continues, prices should rise sharply after the halving.
Bitcoin's price has risen above $63,000 in the past, but it is currently just below its all-time high of $68,700 reached 27 months ago. This rally suggests that traders are increasingly eager to jump on the Bitcoin bandwagon.
Fed's March interest rate decision
The Fed's March meeting will be critical in assessing the future trajectory of rate cuts. Fed Chairman Jerome Powell had originally predicted three rate cuts in 2024, and Fed officials were expected to become more cautious following the CPI data. Given current expectations and economic indicators, a rate cut is likely not on the table at the March meeting. However, the Fed's comments and tone regarding its March outlook will be critical in assessing the macroeconomic backdrop. The market is currently betting on interest rate cuts starting in September.
If the Bitcoin rate rises after the halving, purchasing power will continue to be under pressure. However, any signs that the Fed may delay its decision to cut rates could further reduce risk appetite. This could lead to lower demand for Bitcoin after the halving.
Bitcoin monthly investment return
Return on investment (ROI) is an important parameter used by many investors to value financial assets. At the moment, his ROI on BTC remains resilient. Wall Street investors are pouring money into Bitcoin ETFs because Ethereum and BTC offer higher investment returns than other assets, including gold, oil, stock exchanges, and other assets.
If this trend continues next month, investor traction on Bitcoin is likely to continue. A higher ROI also helps investors maintain a stable risk appetite, which helps maintain the BTC price.
