Bitcoin Halving Event Underscores Scarcity, Hints at Bullish Run

Bitcoin's halving event has slowed supply growth to below that of gold, highlighting its scarcity and predictable monetary policy, according to Ark Invest's Yassine Elmandjra. The analyst suggests a potential rally based on historical price increases following previous halvings, with an average gain of around 3,108% in the 12 months following the event.

Bitcoin: The Halving Event and Its Potential Impact

April 12, 2022

Following the highly anticipated halving event in Bitcoin's mining process, renowned investment firm Ark Invest has weighed in on its potential implications for the cryptocurrency.

Halving: A Declining Supply Growth

Yassine Elmandjra, Director of Digital Assets at Ark, elucidated the mechanics of Bitcoin's halving. Every four years, approximately, the block reward for Bitcoin miners is halved. This mechanism ensures a predictable monetary policy, limiting the supply growth of Bitcoin.

"Bitcoin's supply growth has now fallen below that of gold, estimated to be 1.7% in 2023," said Elmandjra. "This halving event emphasizes Bitcoin's role as a scarce asset, with its total supply capped at 21 million."

Historical Performance Post-Halving

Elmandjra highlighted the historical correlation between Bitcoin's halvings and subsequent rallies. Since its inception in 2009, Bitcoin has experienced three halving events, each followed by significant price appreciation.

"In the 12 months following the previous three halvings, Bitcoin's price rose by an average of 3,108%, ranging from 285% to 8,478.2%," he noted.

Current Market Sentiment

Despite the anticipation leading up to the halving event, Bitcoin's price action has been relatively subdued since. However, Ark's analysis suggests that a rally may be imminent.

"Bitcoin's halving has historically coincided with extended bull market runs," said Elmandjra. "The market's current weakness could be a temporary setback, potentially setting the stage for a renewed surge in the coming months."

Bitcoin vs. Gold

Ark's analysis also compares Bitcoin's supply growth to that of gold. Elmandjra emphasized that Bitcoin's supply growth is now lower than that of gold, suggesting its diminishing inflationary nature.

"Central banks can adjust the supply growth of sovereign currencies at will," said Elmandjra. "In contrast, Bitcoin's supply growth is predetermined, ensuring that its total supply never exceeds its 21 million cap."

Expert Opinions

While Ark Invest's analysis provides a positive outlook for Bitcoin, not all experts share this optimism. Peter Schiff, a prominent gold advocate, has consistently dismissed Bitcoin as a viable form of "digital gold."

"Bitcoin's value is purely speculative, unlike gold, which has intrinsic value," said Schiff. "The halving event will not change that fundamental difference."

Current Market Conditions

As of this writing, Bitcoin is trading at $66,145.63, showing little movement over the past 24 hours. The cryptocurrency has faced headwinds in recent weeks due to concerns over rising inflation and potential interest rate hikes by the Federal Reserve.

Should the Fed reconsider its rate hike strategy in the future, it could reignite risk-on sentiment and potentially benefit Bitcoin and other volatile assets. However, the market remains highly uncertain, and investors should proceed with caution.