Every four years, the crypto world gears itself up for what has historically been a very exciting time in the industry: the Bitcoin (BTC) halving.With the next halving set to take place next week, we reached out to the fintech industry to find out what impact the event would have on the crypto industry as well as the greater fintech landscape.For those outside of the crypto world, the Bitcoin halving may seem like a strange idea: why half how quickly you can get something when it is in such high demand? It is a concept written into the cryptocurrency’s algorithm to counteract inflation.When Bitcoin was initially introduced in 2009, each time a miner added a new block to the blockchain, they were rewarded with 50 BTC.
However, this high of a reward was unsustainable going forward.Especially as it has a limit of 21 million, and the more people want to mine it, the sooner it will hit this cap.As a result, when roughly 210,000 blocks had been added, Bitcoin underwent its first halving in November 2012.The reward for each block dropped to 25 BTC.
Four years later in July 2016, the same event took place, halving the reward once more to 12.5 BTC.Miners now get 6.25 BTC per successful addition to the blockchain following the May 2020 halving.Currently, each successful reward is worth around £338,162, however, if miners were still getting 50 BTC per addition, they would be receiving over £1,000,000.The halving taking place next week will likely see each addition to the blockchain receive 3.125 BTC going forward.
Price surge is on the way In 2016 and 2020, the halving caused huge price rises with the crypto’s value rising by 194 per cent (£170-£500) and 100 per cent (£4,000 to £8,000) respectively.Based on past events, next week’s Bitcoin halving will likely see the price of the crypto soar.
Commenting on this, John Roy , managing director of technology at Water Tower Research, the investors relations platform said: With Bitcoin holding above $70,000 and an upcoming halving event poised to slow Bitcoin’s growth, ETFs from major financial firms like iShares, Fidelity, Franklin, and ARK have seen significant interests.“This interest is heightened by the diminishing supply of bitcoins, inching closer to the cap of 21 million globally, with around 19 million currently in circulation.
While past halving events have not directly caused a price surge, the halving process garners significant attention as an impending event, highlighting the scarcity of Bitcoin.This anticipated scarcity, combined with the approaching 21 million limit, suggests a potential for an upward price movement.“As Bitcoin continues to captivate investors, companies involved in Bitcoin processing and related technologies are expected to gain increased attention.” A strong year for Bitcoin In January 2024, the Securities and Exchange Commission approved the listing and trading of a number of spot Bitcoin exchange-traded product (ETP) shares.This meant US investors, both institutional and retail, now had a clear way to track the movements of the crypto and could make purchases without having to set up an account or digital wallet with an unregulated exchange.This positive move for the industry set the current bull market in motion.Commenting on this, Alyse Killeen , founder and managing partner of Bitcoin-focused venture firm Stillmark said: “Previous halvings have indeed had short-term effect on the price of BTC, but these rises are rarely if ever sustained.If you look at what’s really moved the market this year, it’s the advent BTC Spot ETF, which single-handedly brought BTC out of a long period of stagnation.“This is another lesson in what every investor should know: ultimately, what moves any asset market in the long-term is its utility.
Spot ETFs are a very specific example of a new utility, but there are many more that have been, or about to come on-stream.
These range from secure blockchain-based messaging platforms, to smart contracts, to use cases for harnessing wasted energy from the oil and gas industry to mine Bitcoin.When applications have relevance to ordinary people, they are even more powerful in terms of adoption, use and therefore long-term increase in bitcoin’s value.” Since then, the crypto market has boomed.In March, Bitcoin and many other cryptocurrencies surpassed their previous all-time highs, with BTC reaching $74,000.
A strong year for crypto Other notable achievements in March alone were highlighted by KuCoin.The Ethereum network saw significant progress with the implementation of the Dencun upgrade, which resulted in a 13.66 per cent increase in the Total Value Locked (TVL) within its Layer2 solutions, as measured in ETH.This development, along with a marked upswing in crypto investment and financing—highlighted by 180 projects attracting a combined financing of $1.16billion—underscored a robust resurgence in the primary investment market.What’s next? With so many things appearing to go in the right direction for cryptocurrencies, we asked the industry if the Bitcoin halving will inspire confidence in investors and whether or not this will result in long-term success for the crypto.Strategy is needed Ben Cousens , chief strategy officer at ZBD, the Bitcoin software and infrastructure development company, noted that having a Bitcoin strategy in place is paramount for a fintech firm in the modern era.He added that the halving would serve as a good way to educate people on Bitcoin, with it bringing more attention to the crypto.“I would say that the halving intrigues rather than investors.
It’s a supply constraint that puts upward pressure on the fiat price.
It’s an inherent part of the technology; typically each halving serves to educate people about how Bitcoin works.“Fintech businesses without a Bitcoin strategy will fall behind.Bitcoin adoption is growing exponentially and has been since its creation.It won’t stop until it has replaced our financial bedrock.” Short term and long term gains Kate Leaman , chief market analyst at AvaTrade, the trading platform, explains how this halving has come at the perfect time to not only capitalise on a strong bull market, but also strengthen Bitcoin for the long term.“As for the mood around this halving, it leans more towards the bullish side.This means people are generally optimistic, expecting the price of Bitcoin to rise.
Investors are relatively hopeful – banking on the pattern of past halvings where prices went up – of seeing a similar increase this time around.“Looking at the long-term effects, the halving is seen as a positive move for Bitcoin’s future.It’s like making a rare collectible even rarer, which can drive up its value over time.This scarcity, combined with growing interest in Bitcoin as a digital asset, could strengthen its position in the market and potentially increase its price in the long run.” The halving is less manic now For Tom Higgins , CEO, Gold–i, the trading tech platform, halving is no longer as anticipated as it once was.“Bitcoin grew in fits and spurts and has collapsed a number of times due to believers being conned (FTX, etc), and pandemics and wars.What changed things for good in this bull market is the institutional money that has flooded into the Bitcoin ETF market, despite, not because of, the SEC.“Halving used to be the ‘big news’ in the land of Bitcoin, but now so many other global events make more difference, that halving is less manic.
“Halving will not dent confidence as it is planned and known but it will not massively increase the price as that is already priced-in.Some technical aspects will support price growth as there will be fewer Bitcoin produced after the halving, but that is not new news.“With huge amounts of institutional money in the Bitcoin system, this is not a short-lived hype.
It is here to stay, so you better get used to it!”.
