Cryptocurrency’s price rally likely to be more measured, says Luno
KUALA LUMPUR: There is no certainty that the fourth Bitcoin halving will generate the same level of momentum as previous occurrences, said Luno Malaysia.
Luno country manager Scarlett Chai said the halving, which would occur approximately every four years, was built into the algorithm behind the Bitcoin network as a deflationary measure.
“While previous halvings have historically shown a price rally within a year, there are no guarantees that the upcoming halving would carry the same momentum as before.”
The third Bitcoin halving took place in May 2020, while the two previous halvings preceded dramatic price increase.
However, its recent rally to a new all-time high has meant this cycle looks different from previous ones, possibly driven by the recent institutional interest driven by the approval of Bitcoin exchange-traded funds (ETFs) in the United States.
“While the principles of supply and demand will certainly play a role in Bitcoin’s pricing, we also have to understand that the Bitcoin market is now different with the inflow of institutional investors and new liquidity from ETFs,” she added.
The first Bitcoin ETF in the US amassed over US$50 billion in assets under management.
Last month, Bitcoin hit an all-timehigh price of over RM347,400 on Luno.
The company said the overall supply of Bitcoin would not drop due to the halving.
Instead, it will continue to increase until it hits the cap of 21 million Bitcoins around 2140.
“The halving serves to slow down the issuance of new Bitcoins by reducing miners’ rewards, acting as a measure to prevent oversupply and maintain market stability.”
When the first halving took place in 2012, Bitcoin was priced at just over US$12. After the first halving, the price of Bitcoin shot up to around US$1,000.
The second halving event happened in 2016, when Bitcoin was valued at around US$640. By July 2017, it had risen to US$2,550.
The third and most recent halving occurred in 2020, when Bitcoin traded for about US$8,750. Within a year, it reached approximately US$62,000.