Satoshi

Satoshi Nakamoto

Bitcoin

Impact

Hedge

<h2 id="key-points">Key Points</h2>
<ul>
 <li>Bitcoin (BTC) continues to grow in demand due to increased retail and institutional adoption.</li>
 <li>The upcoming Bitcoin halving event may further intensify this demand.</li>
</ul>
<p>Bitcoin’s supply reduction and growing adoption by both retail and institutional investors are driving up demand for the leading cryptocurrency.</p>
<p>The approval of Bitcoin exchange-traded funds (ETFs) in the United States, the largest global equity market, has also contributed to this demand. These ETFs have been breaking records since their launch.</p>
<h2 id="bitcoin-halving-and-its-impact">Bitcoin Halving and its Impact</h2>
<p>Bitcoin’s halving event, which occurs approximately every four years, is a significant factor in its growth.</p>
<p>This programmed event cuts Bitcoin miners’ rewards by half, meaning miners will need to do the same amount of work for half the BTC reward.</p>
<p>The predictability of this event provides comfort to those in the cryptocurrency world who have experienced previous Bitcoin cycles.</p>
<h2 id="the-economics-of-bitcoin">The Economics of Bitcoin</h2>
<p>The fundamental law of economics, supply and demand, plays a crucial role in Bitcoin’s value.</p>
<p>Bitcoin has a deflationary issuance schedule, with the halving of new supply every four years, which reduces the supply side.</p>
<p>However, the demand side is not guaranteed. Satoshi Nakamoto and the early Bitcoin adopters left the fate of the demand portion to the free market.</p>
<p>Since Bitcoin’s inception in 2009, its fiat currency price has seen continuous price discovery and retracement.</p>
<p>Speculative assets like Bitcoin have been helped by low interest rates across much of the developed world since the Great Recession of 2008–2009.</p>
<p>However, the U.S. Federal Reserve started raising interest rates in March 2022, which had both positive and negative impacts on Bitcoin’s price.</p>
<p>Despite higher interest rates than at any point in Bitcoin’s existence, Bitcoin’s price currently hovers around $63,000, indicating that other factors are overshadowing the impact of interest rates on BTC’s price.</p>
<h2 id="bitcoin-as-a-hedge-against-inflation">Bitcoin as a Hedge Against Inflation</h2>
<p>One such factor resulting from the halving event is the perception of Bitcoin as a hedge against inflation and a store of value.</p>
<p>These narratives are fueled by the deflationary aspect of regular Bitcoin halvings and promoted by investment experts.</p>
<p>The Bitcoin halving doesn’t necessarily answer the question of demand. If the demand for Bitcoin remains the same and the supply decreases, the fiat value of Bitcoin should rise.</p>
<h2 id="institutional-adoption-of-bitcoin">Institutional Adoption of Bitcoin</h2>
<p>The recent years have seen an increased interest in Bitcoin from traditional financial institutions.</p>
<p>Some believe that a “Bitcoin Supercycle” would occur once traditional institutions start buying and adopting Bitcoin, causing the price to continuously rise due to the increased demand.</p>
<p>Despite this, not everyone agrees with this sentiment. The U.S.-based spot Bitcoin ETFs from major traditional and crypto native institutional investors have been driving up demand for BTC since their launch in January 2024.</p>
<h2 id="bitcoin-s-equilibrium">Bitcoin’s Equilibrium</h2>
<p>In economics, equilibrium refers to a balance between supply and demand. In reality, this equilibrium is in constant motion, as anyone who has followed the price action of Bitcoin can attest to.</p>
<p>Bitcoin’s halving cycle provides a predictable reduction of new supply, making Bitcoin a deflationary asset. The demand narrative is the variable in the equation, which can be influenced by various factors.</p>
<p>As long as demand remains the same, Bitcoin’s fiat value equilibrium will likely see pressure to climb as the cycles move forward.</p>
<p>In March, Bitcoin broke all previous cycles by hitting a new all-time high (ATH) of $73,900 before the halving event in April.</p>
<p>This has left analysts wondering what this means for the future price of BTC as the halving draws closer.</p>
<p>Speculation surrounds the institutional adoption of Bitcoin and whether this will bring stability to the asset in terms of its purchasing power.</p>
<p>As powerful and prominent as the institutions are, without usage and utility by the masses, price discovery will likely continue through this cycle as it has in the past.</p>
<p>The only certainty is the Bitcoin halving.</p>

Bitcoin Halving : A Watershed Moment Amidst Surging Institutional Interest

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