BlackRock: «Bitcoin's halving is fundamental to its value proposition»

Foto del autor


Key facts: BlackRock warns that bitcoin is subject to high price volatility in the short term. The halving implies bullish potential for bitcoin, the company highlights. BlackRock, the largest asset management company in the world, has highlighted the importance of the bitcoin (BTC) halving in its approach. Such an event is expected to occur for the fourth time on the night of this April 19 or the early morning of tomorrow, April 20. In a report on the matter, BlackRock maintains that “halving events are encoded in Bitcoin's source code and are fundamental to BTC's value proposition as a transparent cryptoasset with a finite supply.” It details that the halving, which occurs automatically every around four years, reduces the rate at which new BTC is issued by half. “These scheduled events allow bitcoin to be slowly distributed in the market while maintaining its scarcity,” he highlights. After this weekend's halving, the daily broadcast of bitcoin will drop from 900 BTC to 450 BTC, which will be halved again within four years in 2028 and so on until reaching zero, something planned for 2140. Therefore, BlackRock emphasizes that the halving slows down the supply in the bitcoin miners market , who are the ones who issue the currency. It is because of that This event has price implications., since it allows it to rise due to lower demand in the long term. “Many cryptocurrency enthusiasts perceive the halving through a bullish lens, since a reduced rate of issuance of bitcoins could serve as a tailwind for the appreciation of its price in an environment of constant demand,” explains the company. asset Management. Using the following graph, it shows that Bitcoin's performance has always been positive in the previous year, during and after each halving.

Bitcoin price performance by year. Source: BlackRock.

The impact of the halving on supply will decrease over time

BlackRock warns that, although the halving is a very important event for the value of BTC, its impact on supply by miners decreases on every occasion. “With around 94% of all bitcoin already mined, future issuance represents a small fraction of the circulating supply,” he explains, as seen below.

The yellow line shows the issuance of bitcoin and the green line shows the circulating supply. Source: BlackRock. It indicates that this could reduce the comparison with past emission reduction events. Furthermore, he adds that bitcoin has only been around for 15 years, so a sample size of just three previous halvings is small to predict the future. Taking all of this into account, BlackRock believes that “the halving presents a good opportunity to remind investors to take a measured approach that not only considers the upside potential that could come from investing in bitcoin, but also its volatility and risk characteristics.” . “One thing we can say with confidence is that bitcoin is a volatile asset subject to large short-term price swings,” he clarifies. And he concludes by saying that, beyond risk considerations, bitcoin investors don't have to do anything to prepare for the halving. Meanwhile, as BitcoinDynamic reported, the digital currency has shown high price volatility with the approach of the halving as it has historically done. At the time of writing, it is trading at USD 65,000, 11% below the all-time high of USD 73,700 that it touched a month ago. This BlackRock report comes three months after it launched a bitcoin exchange-traded investment fund (ETF) in the United States, which is close to becoming the largest in the world. Currently, it owns 273,140 BTC, while the company Grayscale currently surpasses it with 306,399 BTC, according to data from BitcoinTreasuries.