Will Bitcoin plunge after halving?

Will the Bitcoin halving trigger a crash? Economists and market analysts are divided over whether a plunge will follow the halving. Arguments in favor of the plunge include reduced supply, huge early gains and historical patterns. Arguments against the plunge include increased institutional investment, technological developments and long-term demand. Ultimately, Bitcoin price will be determined by the interplay of supply and demand forces.

Will Bitcoin halving trigger a crash?

Bitcoin halving means that the number of newly generated bits will be reduced every four years. Halving the number of coins is an important mechanism in the Bitcoin protocol. It aims to control the supply of Bitcoin and maintain its scarcity and value.

Will it plummet after the halving?

Economists and market analysts are divided over whether Bitcoin’s halving will trigger a plunge.

Support the plunge view

• Reduced supply: After the halving, the number of newly generated Bitcoins decreases, which may lead to a situation in which supply exceeds demand. . This could push prices higher, but if demand is insufficient, it could lead to a price pullback.
• Huge early gains: Before the halving, the price of Bitcoin usually rises because investors expect that the halving will bring supply constraints. Such gains are often unsustainable and a technical correction may occur after the halving.
• Historical regularity: After the previous halvings, Bitcoin prices have experienced sharp corrections, which may indicate that the plunge after halvings is a historical regularity.

Opposition to the plunge view

• Increase of institutional investment:In recent years, more and more institutional investors have held With Bitcoin, this adds stability to the market. These investors are unlikely to sell Bitcoin after the halving.
• Technological Development: Bitcoin’s infrastructure continues to evolve, including second-layer solutions such as the Lightning Network. These innovations increase Bitcoin’s scalability and usability, potentially offsetting the halving’s impact on price.
• Long-term demand: As inflation rises and fiat currencies depreciate, Bitcoin’s appeal as a store of value continues to grow. This long-term demand is likely to support prices even as supply decreases.

Conclusion

The impact of Bitcoin halving on price is complex and difficult to predict. While there is a risk of a plunge, increased institutional investment, technological developments and long-term demand may also offset this risk. Ultimately, Bitcoin price will be determined by the interplay of supply and demand forces.

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