The Much Awaited Halving 2024: Can it really be a catalyst for the Next Boom in the DeFI Space?
“2024 = Bitcoin Halving Year” is a common phrase and the much-awaited event within the DeFI Space by all enthusiasts. Looking at the performance of the past Halving year as what is called, it is fair to see why everybody is excited for next year. Now as we are approaching the penultimate month of 2023 and analyst predictions are through the roof, let us examine the buzz behind the Halving event in 2024. Can it really spearhead a great year for the DeFI Space?
Bitcoin Halving: What is it?
Bitcoin is finally trending once again and after quite a challenging year in 2022, it deserves to be in the spotlight once again. Bitcoin finally breaks the $35,000 mark and seems to be in a rally not quite seen before in the last quarter of 2023. Although “ETF” is a word highly regarded by Bitcoin Maximalist and the community within the DeFI Space, the word “Halving” has also been a word frequently admired as we head to 2024
A lot of analysts predict that Bitcoin will hit the $100,000 mark by 2024 as the charts could suggest, the community just hoped that this rally signals the end of the Winter phase. The word “Halving” is a common occurrence in every analyst prediction and this sparked a huge buzz around it from the community. Why is this halving event special you may ask? To understand halving and what it actually represents, we need to know the origins of the Bitcoin network.
So Bitcoin was introduced in 2008 by Satoshi Nakamoto as a peer-to-peer electronic payment system that is built upon a blockchain network. Its peer-to-peer network means that the system is operated in a decentralized manner and Bitcoin transactions are verified by everyone who owns the copy of the ledger. This decentralized network was the first of its kind with Bitcoin and forms an important part of the security behind the blockchain system.
These users of the Bitcoin Blockchain who verify the authenticity of the transactions are called Miners and they are rewarded with an amount of Bitcoin in return for their efforts.As Bitcoin starts to gain major attention from the community, these transactions start to become more common and there is suddenly a rush of new miners that are interested. Now “Halving” is a system in place that is in line with Bitcoin’s limited supply and ensures that there will still be enough Bitcoin to mine for years to come.
A Bitcoin Halving or “Halvening” is an event that occurs once every 210,000 blocks within the Bitcoin Network which is roughly every four years. It is an event where the reward for verifying a single block of transactions on the Bitcoin network is reduced by Half in order to limit the amount of new Bitcoins generated. Although the exact date is still not yet known, the next bitcoin halving is expected to occur when the block hits 840,000 around April 2024 and it will see the block reward fall from 6.25 to 3.125 bitcoins.
These halves are necessary to not only keep the supply of Bitcoin in check with its demand but also to keep the Bitcoin Network operating for years to come. The Miners are the backbone of the Bitcoin Blockchain network and as long as the rewards are still present, we can be rest assured that the Blockchain system will continue to operate. One of the highlight reasons for this is obviously for traders who look to capitalize on the momentum and the hype behind this special event.
Why is this a special event then, you may ask? As what we learned from history is that the momentum that is gained by Bitcoin usually is a catalyst for the other Digital assets present in the DeFI Space. Bitcoin still remains the most sought-after Digital Asset in Space and it is fair to see that the Market Cap of the DeFI Space will follow its movement. This is why Halving, a sought-after event for the DeFI Space, is looking forward to seeing the end of the Crypto Winter.
The first of these Halving Events was presented on 28th November 2012 when the network reached 210,000 blocks ever since its launch in 2009 and the reward was reduced by half from 50 BTC to 25 BTC.At that time Bitcoin was still a relative unknown to the general community and post-halving in 2012, Bitcoin price shot up from $12 to $1,032 (more than 8,500%) in less than a year as the amount of growth started to tempt more investors to join in.
The second Bitcoin Halving occurred on 9th July 2016 when the network reached 420,000 blocks ever since its launch and the reward was further reduced by half from 25 BTC to 12.5 BTC. At that time Bitcoin was already establishing a presence for itself valued at $651 but experienced a massive crash shortly after in 2017. The crash would prove temporary and it would rally on to an all-time high of $20,089 around 2018 as it experienced the 2nd Boom period since its inception.
The third Bitcoin Halving occurred on 11th May 2020 when the network reached 630,000 blocks ever since its launch and the reward was again reduced by half from 12.5 BTC to 6.25 BTC. This was a strange one as it occurred in the midst of the uncertainty of the Pandemic but the economics of the system started to shine during this period. Despite the economic uncertainty and lockdowns, Bitcoin managed to carry out a rally to its current all-time high of $66,000 in the space of 18 months since the halving.
Unfortunately, we all know what preceded this astonishing rally but the Halving event seems to be a good catalyst for the DeFI Space because of the economics that is in place behind the system. As long as the demand for Bitcoin remains strong, a lesser supply should in theory provide a greater value but it’s also not a guarantee. So how will the outlook for Bitcoin be post the next halving in 2024?
Will it have a large impact on the trajectory of the DeFI Space in 2024?
As mentioned above whatever happens with Bitcoin should in theory provide a large-scale impact on the growth and development of the DeFI Space. A great example of this will be the 2021 Bitcoin Boom as it brought many new developments for the DeFI Space. The concept of NFT and Metaverse were a non-existent topic before 2021 and it only continues to grow as more creators begin joining in to explore the space.
This growth was also reflected in the user base as DeFI Space became the most talked about opportunity in the midst of the pandemic and the number of users nearly tripled from its previous year 2020. This then drove more institutions to expand the DeFI Space capabilities and more innovations were introduced from different Digital Asset providers. Of course, value remains the most visible effect of Halving but there is a lot of growth that is caused by the event.
When talking about value, we know that the DeFI Space can also be a volatile one so we all need to proceed with caution on the DeFI Project we choose. Halving may also cause some of the miners to lose interest in the network as the reward they receive is lesser than it was before so the Bitcoin network may suffer some adjustment but this also ensures that the Bitcoin supply shall always be there for years to come.
All in all, the halving event has tremendous potential to provide a positive impact on the trajectory of the DeFI Space in 2024. Pair that with the positive momentum that Bitcoin is gaining currently, it is reasonable to see why analysts are predicting that Bitcoin could break the all-time high by 2024 but we also need to do our research to justify our own predictions. The DeFI Space certainly has all the tools to have a great year in 2024 and that’s why you need to pick the right potential one as your preference.
We in Nagaya Technologies Pte. Ltd are excited about the developments and growth that are going on within the DeFI Space so far in 2023. We hope that the coming year will be a great momentum for the DeFI Space to reach its full potential. Nagaya in itself is the World’s First Hybrid Digital Asset that is backed by Gold to maintain its intrinsic value while creating sustainable growth in the long term. We understand the value that real assets like Gold bring and we hope that combining it with the enormous potential of the Blockchain Network should be able to provide value to all of you our holders. If you are interested to know more about Nagaya, you can visit our website at www.nagaya.co
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