Crypto enthusiasts await Bitcoin halving, market remains highly positive

Bitcoin halving countdown: Bitcoin enthusiasts are awaiting Bitcoin's 'halving' on Friday, an event embedded within the cryptocurrency's core technology to reduce the pace of new Bitcoin creation. 

Scheduled approximately every four years, this feature was originally integrated into Bitcoin's code by its pseudonymous creator, Satoshi Nakamoto. Chris Gannatti, Global Head of Research at asset manager WisdomTree, hailed the halving as "one of the biggest events in crypto this year." According to CoinGecko's countdown clock, the halving was set to transpire in the early hours of Saturday GMT.

For some proponents of cryptocurrency, the halving underlines Bitcoin's value as an increasingly scarce asset, given Nakamoto's deliberate cap on Bitcoin supply at 21 million tokens. Conversely, sceptics view it merely as a technical adjustment hyped by speculators to inflate the virtual currency's price. 

Mechanically, the halving reduces the rewards miners receive for generating new tokens, thereby heightening the cost of introducing new bitcoins into circulation. The development follows Bitcoin's price surge to an all-time high of $73,803.25 in March, following a gradual recovery from the dramatic plunge witnessed in 2022. As of Thursday, the world's largest cryptocurrency was trading at $63,800.

Excitement surrounding the US Securities and Exchange Commission's approval of spot bitcoin exchange-traded funds in January, coupled with expectations of central bank rate cuts, has boosted Bitcoin and other cryptocurrencies. 

Past halving events occurred in 2012, 2016, and 2020, with some enthusiasts pointing to subsequent price rallies as indicative of potential price boosts following this halving. However, many analysts remain sceptical, with JP Morgan analysts asserting that any price surge has already been factored into the market. They anticipate a post-halving price decline, citing overbought conditions and subdued venture capital funding in the crypto industry this year.

While financial regulators caution against bitcoin's high-risk nature and limited real-world utility, approvals for bitcoin-linked trading products have been gradually increasing. 

Andrew O'Neill, a crypto analyst at S&P Global, expressed scepticism regarding the predictive value of previous halving events on bitcoin's price, emphasizing the multitude of factors at play. Bitcoin has grappled with directionality since March's peak, experiencing recent declines amid geopolitical tensions and expectations of prolonged higher interest rates by central banks, causing unease in global markets.

(With Reuters inputs)