Crypto enthusiasts await bitcoin 'halving'

The halving, which occurs around every four years, was written into Bitcoin's code at its inception by pseudonymous creator Satoshi Nakamoto as a way to lower the rate at which bitcoins are created

Bitcoin enthusiasts were eagerly waiting for bitcoin's 'halving' on Friday - a change to the crypto currency's underlying technology designed to cut the rate at which new bitcoins are created.

The halving, which occurs around every four years, was written into Bitcoin's code at its inception by pseudonymous creator Satoshi Nakamoto as a way to lower the rate at which bitcoins are created.

Chris Gannatti, Global Head of Research at asset manager WisdomTree, which markets bitcoin ETFs, called the halving "one of the biggest events in crypto this year".

As per CoinGecko's countdown clock, the halving is slated to occur in the early hours of Saturday GMT.

For some crypto fans, the halving will underscore bitcoin's value as an increasingly scarce commodity - Nakamoto capped bitcoin supply at 21 million tokens - while sceptics see it as little more than a technical change talked up by speculators to inflate the virtual currency's price.

The process works by halving the rewards crypto currency miners receive for creating new tokens, making it more expensive for them to put new bitcoins into circulation.

It follows a jump in bitcoin's price to an all-time high of $73,803.25 in March, having spent much of 2023 slowly recovering from 2022's dramatic slump. On Thursday the world's largest crypto currency was trading at $63,800.

Bitcoin and other crypto currencies have been supported by excitement around the U.S. SEC’s decision to approve spot bitcoin ETFs in January, as well as expectations that central banks will reduce interest rates.

Previous halvings took place in 2012, 2016 and 2020. Some crypto fans point to price rallies that followed them as a sign that bitcoin's next halving will boost its price, but many analysts are sceptical.

We do not expect bitcoin price rises post halving as it has been already priced in, JP Morgan analysts stated this week.

They expect bitcoin's price to drop after the halving, because it is "overbought" and VC funding for the crypto industry has been "subdued" this year.

Financial regulators have long cautioned that bitcoin is a high-risk asset, with limited real-world uses, although more have begun to approve bitcoin-linked trading products.

Andrew O'Neill, a crypto analyst at S&P Global, said he was "somewhat sceptical of the lessons that can be taken in terms of price prediction from previous halvings."

It is only one factor in a multitude of factors that can drive price, he added.