The impact of Bitcoin‘s halving on Bitcoin itself is evident, but it’s uncertain how this will play out for alternative cryptocurrencies. Satoshi Nakamoto designed Bitcoin’s halving mechanism as a solution to address Bitcoin’s potential issues with inflation and network demand.
Yet, Bitcoin’s halving might have surprised him with its influence on altcoins. In this post, we will explore if Bitcoin’s halving brings blessings or challenges for altcoins’ growth.
Impact of Bitcoin Halving on Altcoins
When examining the effect of Bitcoin’s halving, it’s important to take into account various elements. Factors such as token economics, investor sentiment, token demand, community backing, and unique selling propositions are crucial for estimating the price trend of altcoins following a halving event.
Crypto Market Sentiments
Bitcoins influence on market trends and price fluctuations is considerable, often referred to as Bitcoin’s dominance. Currently, this dominance has reached a peak not seen in the past three years.
Currently, the fear and greed indicator registers a reading of 55, indicating a balanced state between greed and fear. The market, which had been in a prolonged bullish phase, has now moved into a correction zone.
In recent optimistic periods, Bitcoin reached its maximum price of $73,750.07. At present, however, Bitcoin’s value has declined to around $12,000 less than that peak, which in turn has led to a drop in the entire cryptocurrency market.
From the relationship we observe between Bitcoin’s halvings and its historical price trends, it can be inferred that Bitcoin’s halving events typically trigger a bull market for Bitcoin. In turn, this bull market is believed to positively impact the prices of other cryptocurrencies as well.
The crypto market and market sentiment are confident about an altcoin boom in the next few months.
Altcoin Price Movements
Just like Bitcoin, the price of Ethereum, an altcoin, follows a comparable trend. Currently, Ethereum is valued at $2,973.08 after experiencing a decrease in price, similar to Bitcoin. Post-halving, we might witness a surge in Bitcoin’s price, and Ethereum could possibly experience the same pattern of growth.
During Ethereum’s previous halving event in 2016, there wasn’t a noticeable price increase. Ethereum’s value ranged from $12 to $15 at that time, yet the first half-year following the halving didn’t bring about any substantial price growth despite Bitcoin consistently climbing in value.
In May 2020, the third price reduction for Bitcoin and Ethereum occurred, but this event differed significantly from the previous one. Prices for both cryptocurrencies rose dramatically during this time and eventually reached their peak values in November 2021.
Most altcoins, including Solana, have their distinct ecosystems and cater to different meme coin communities. They aim for independence from other networks. However, an uncanny resemblance in price trends between Bitcoin and Solana can’t be ignored when examining their charts.
Currently, Solana’s price stands at $130.92 following a 35% decrease over the past month.
Major Factors Driving The Past Halving Surges
During the second Ethereum halving, the price began to rise following a six-month period after Bitcoin’s halving event. This upward trend can be attributed to the emergence of Initial Coin Offerings (ICOs) in the Ethereum market, rather than the halving itself being the primary cause of the price increase.
During the third Bitcoin halving in 2020, when interest rates were already at zero due to the ongoing Covid-19 pandemic, an additional economic factor was necessary to influence the price of altcoins.
Is Bitcoin Halving A Gift To Altcoins?
Based on past price trends of altcoins during Bitcoin halvings and other economic occurrences in 2024, we can expect a price increase for altcoins as well. Factors contributing to this potential surge include the Ethereum ETF approval, rising US inflation, and more favorable crypto regulations.
Additionally, it’s important to remember that numerous other influences can affect altcoin prices. Consequently, the schedule for this bull market may differ from past ones.
From a historical perspective, there hasn’t been an immediate bull market for Bitcoin following a halving event. The length of time altcoin investors must hold on to their investments before experiencing significant gains is something we need to observe.
Read More 3 Signs Of Crypto Market Crash After Bitcoin Halving
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2024-04-18 12:42