14th March, 2024 – After reaching its all time high on Wednesday, Bitcoin’s rally ended on Thursday. On Friday the most famous cryptocurrency continued to struggle, losing more than 4% at the time that this article was written (8:30 p.m. CET). The fact that Bitcoin did reach an all time high before its halving, was something unprecedented in the recent history of the cryptocurrency. This was due to the increasing demand for the Bitcoin spot ETF, that we explained in our recent article of the 12th of March that you can read on our website. For those of you that do not know what the Bitcoin halving is, I will now explain it to you. Bitcoin halving is a monetary policy of the cryptocurrency that reduces approximately every four years the rate at which new Bitcoins are created by 50%. As of today, the Bitcoins mined everyday are 900, and theoretically on the 19th of April 2024, when the halving should happen, they will go down to 450. This process makes technically Bitcoin a de-inflated currency, because the offer of the currency is decreasing in time. With a basic economic knowledge, it is clear why Bitcoin reached its all time high after the halving happened in the past, because with the same level of demand, the offer was decreasing. Though, as for any assets, the past performance is not an index of the future performance. For this reason it is not sure whether or not Bitcoin will go up once the halving will happen and break once again its all time high. The downfall of Bitcoin also affected some crypto stocks, such as Coinbase and Microstrategy, that lost in the premarket trading 6% and 5% respectively, to then recover. Coinbase did manage in fact to gain 1.3%, while Microstrategy has gained around 5%.
Author: Filippo Ferrero