Bitcoin Halving refers to an event that occurs roughly every 4 years when the reward given to miners for unlocking a block is halved. The creator of Bitcoin, Satoshi Nakamoto, has written halving into Bitcoin’s code in order to manage inflation.
The latest Bitcoin halving took place last week, on May 11, when the reward for mining a new block was cut from 12.5 to 6.25. This is the third Bitcoin halving since its launch in 2009. The first time was in November 2012, and the second in July 2016. The next halving is set to occur in May 2024.
An Increase In Interest to Trade Bitcoin Recorded
On the same day as the event, Bitcoin options trading volume on the CME rocketed to $17 million, beating the recent high of $9.9 million set on May 6, according to data analytics company Skew.
Just a day later, a new high of $30 million was set on the CME, which was also surpassed on Wednesday when the BTC options volume went as high as $40 million. This is a 2,000% jump in volume when compared to data registered last week.
Such an increase in volume and open interest indicates a surge in institutional involvement, which is not surprising given that the halving historically generates high interest to trade Bitcoin, as reported by Invezz.
On one hand, the cryptocurrency quickly recovered lost ground after the Monday halving, and marked a substantial increase in trading volume. On the other hand, Bitcoin’s hash rate has dropped.
Hashrate refers to the computing power used to mine blocks. The hash rate plunged to 98 exahashes (EH/s) – 27% lower than the 135 EH/s registered on Monday, according to bitinfocharts.com.
The drop in hashrate indicates that some miners may have been mining less or have completely halted operations since the Monday’s event. This means that miners with older mining equipment will return a profit much harder. This argument is supported by the recent change of average time taken to unlock a block.
It was anticipated that the halving would have forced out some miners, especially those who possess older-generation mining machines such as Bitmain’s Antminer S9s.
“S9s miners have already lived longer than expected and bitcoin’s price will have to double for these machines to become viable again,” said blockchain expert Alex de Vries.
Where Next for Bitcoin Price?
4 days after the halving event, Bitcoin’s price is up nearly 10%, trading just above $9,400. As the halving event is generally considered to be supportive for Bitcoin price, the price action managed to move above the key $9,000 handle on a surge in demand for the world’s largest digital coin.
The sellers forced a throwback today – when the price action returned to retest the broken resistance/support – but the buyers held their own and defended this very important level. Overall, Bitcoin price looks like it wants to continue higher in the coming days, with the $10,000 the key short-term resistance for the bulls.
A break above $10,074 would also mean a new 3-month high for Bitcoin price. Looking more long-term, the descending trend line is likely to provide a major resistance for the buyers, hence you can expect a very strong defense at $10,500.
The much-anticipated Bitcoin halving event took place on May 11, cutting the miners’ reward from 11.5 BTC to 6.25 BTC. As expected, this event facilitated high interest from the institutional investors, pushing the Bitcoin price above $9,000 once again. If the positive momentum is sustained by the buyers, Bitcoin has room to go to $10,500 in the coming days.
- Introducing MetaWars: A Strategic Blockchain-based Game in the Metaverse
- CENNZnet Celebrates Hackathon with Gitcoin
- Webcams Site, BongaCams, Becomes Next Major Player to Accept Dogecoin
- Twitter Announces Big NFT Plans as Bitcoin ($BTC) Tipping Goes Live For iOS Users
- Kazakhstan Might Have to Shut Bitcoin ($BTC) Mining Operations, Here’s Why