Today, Arthur Hayes, the Co-Founder of BitMEX, wrote a blog post expressing his views on the upcoming Bitcoin halving set for April 20th and forecasting its potential influence on digital currency markets.
The Bitcoin halving refers to a built-in Bitcoin system event that cuts in half the reward given to miners for generating new blocks. This happens roughly every four years or following the mining of 210,000 blocks. The halving function aims to regulate Bitcoin’s availability by incorporating deflationary principles into its economic framework, as the production of fresh bitcoins is gradually reduced over time. Essentially, this mechanism replicates the rarity and value maintenance characteristics found in precious metals such as gold.
Starting April 20, 2024, the reward for mining a new Bitcoin block will be reduced from 6.25 bitcoins to 3.125 bitcoins as part of the scheduled Bitcoin halving event. This change maintains the supply of Bitcoin, which is capped at 21 million coins, and strengthens Bitcoin’s anti-inflationary properties.
In simple terms, the first Bitcoin halving occurred in 2012, and each subsequent halving has generated buzz within the crypto world. Miners, who are essential for maintaining the network and confirming transactions, face a decrease in earnings during a halving. This reduction may impact mining operations and network security temporarily. Additionally, investors view halvings as potential price boosters due to the decreasing supply and potentially constant or rising demand.
According to Hayes, while many believe the upcoming halving is a promising sign for cryptocurrency prices, he offers a contrasting perspective. He hypothesizes that the price could decrease around the time of the event due to heightened market expectations. This possibility arises from his observation that when a large number of traders anticipate a particular result, the unexpected outcome often prevails.
Hayes also points out that the halving coincides with a period of reduced dollar liquidity, which he believes could exacerbate a sell-off in crypto assets. This has led him to decide against trading until May. He mentions having taken profits from his investments in MEW, SOL, and NMT, moving the proceeds into Ethena’s USDe to take advantage of higher yields, contrasting this with previous options like USDT or USDC that didn’t offer such returns.
Although Hayes acknowledges that the market could still climb higher despite his bearish perspective and wishes for it to do so due to his long-term faith in crypto, he decides against closely tracking his speculative investments during the TOKEN2049 conference in Dubai from April 18-19, 2024. Consequently, he opts to dispose of these holdings instead.
Hayes finishes by expressing his readiness to invest significantly in different cryptocurrencies again if his predicted situations materialize. He emphasizes the importance of minimizing losses over the chance of missing out on potential profits, aligning with his financial objectives and lifestyle.
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2024-04-09 12:37