Bitcoin completed the fourth-ever halving in its 15-year history, reducing the incentives that motivate miners to record transactions on the blockchain for the network to verify and confirm from 6.25 BTC to 3.125, leaving just 1.31 million coins to be released via mining rewards. The once-every-four-years event is the source of extreme FOMO, which stands for fear of missing out, a feeling of anxiety amplified by social media posts and people touting life-changing returns. When the feeling takes over, you feel like a hamster running in a wheel.
There will be more Bitcoin halvings in the future, so you can expect to read about this again in 2140, when the number of coins available to the public will have been mined or created. The block rewards will go to zero but will be reduced substantially before that, and miners will continue to be compensated for validating transactions and securing the blockchain. The final halving can be a decisive moment for the cryptocurrency, whose underlying technology and consensus mechanism might need to change to adapt to new challenges and maintain the network’s functionality. Still, it won’t happen for at least another century.
We should be able to make a Bitcoin price prediction, but since the perception of the cryptocurrency is mostly irrational, excluding the thinking of a few traders and investors, it’s difficult, if not impossible, to anticipate how people will react to the halving. You can continue transacting as usual because you won’t notice any difference at all. Price is irrelevant if you truly believe in Bitcoin, so if you’re not willing to deal with cryptocurrency exchanges or the intricacies of wallet and private key management, ETFs offer a solution, even if direct ownership is still the better solution.
The Runes Debut Sends Transaction Fees to Record Highs
People have turned their attention elsewhere this week, nervously awaiting the launch of Runes, a new fungible token standard from Casey Rodarmor that competes with BRC-20s when it comes to efficiency. Runes tries to simplify the creation of digital assets on the Bitcoin network by using the existing UTXO model, which minimizes data footprint and guarantees Runes doesn’t contribute to blockchain bloat. The tokens are pretty much interchangeable, just like dollar bills in your wallet. Naturally, users were eager to mint tokens via the Runes protocol, and the hype activity pushed transaction fees up, surging to $82 million on Saturday.
The Runes project was strategically timed to be launched at the same time as the Bitcoin halving to achieve higher adoption rates, encouraging players to compete with one another to see who can issue the first token. Exchanges worldwide are preparing to list Runes tokens, to say nothing of DEXs and marketplaces that’ve announced they’ll fully support digital assets that launch with the Runes protocol. Even with the reduction in subsidies, miners’ revenue increased thanks to the flurry of activity around memecoins, leading to a record $108 million at current rates.
When Confidence in Bitcoin Is at An All-Time High, Money Leaves Altcoins
Bitcoin traded higher after the quadrennial halving, but many experts believe the fee spike will end up being temporary, shifting from a positive to a neutral stance. The pre-programmed event is a critical moment for investors and participants in the blockchain industry, as it mirrors the evolving market dynamics and the speculative nature of cryptocurrencies. Since BTC isn’t backed by a government, its value is determined by market supply and demand, but it’s become increasingly dependent on investor sentiment. By way of illustration, Elon Musk has the power to drive the value of a cryptocurrency with just one tweet.
Bitcoin is the most popular, liquid, and secure cryptocurrency, so it’s unlikely it’ll go away anytime soon. When confidence in Bitcoin is riding high, capital flows into the world’s largest digital asset, even if altcoins are moving alongside Bitcoin. When people are stocking up on Bitcoin, the entire market benefits from inflows from new traders and investors, so the interconnectedness of BTC and other cryptocurrencies goes way beyond price correlation. The potential effects are challenging to predict because of the profound differences in the ecosystem. We’re only sure there’s much greater activity under the hood of Bitcoin, with developments to the conservative ecosystem.
Bitcoin ETF Surge Is Causing Institutional FOMO, Signaling A Shift in The Financial Landscape
Earlier this year, the SEC approved the first-ever spot Bitcoin ETFs for trading in the U.S., making investing more accessible for everybody and offering a chance to compete on a fair playing field. Institutional investors have been feeling the FOMO and increasing their exposure to the cryptocurrency, which reflects greater trust and mainstream adoption, setting the direction for the entire ecosystem. Put simply, traditional financial entities have reversed their previous stance on BTC, a phenomenon that can be described as stealthy but material, illustrating growing recognition of the cryptocurrency’s potential as a store of value.
Mark Yusko, CIO and CEO of Morgan Creek Capital, says we haven’t yet seen the FOMO phase of Bitcoin market participants, and once it kicks in, the digital asset will reach a different price level. FOMO leads traders and investors to make impulsive decisions; they compare themselves to others, especially when they see peers making a profit from cryptocurrency investments. There’s no better time than now to get into Bitcoin because prices tend to pull back before reaching a new peak around 220-240 days later. Buying the dip is a good tactic if you believe in BTC’s potential growth.
The Takeaway
To say that last weekend produced a crypto market nightmare would be a gross understatement. A lot of the volatility was caused by the halving event, whose impact on miners and price has been well-documented over the years, leaving very little room for a surprising outcome, and it’s interesting to see if it’ll trigger the much-awaited bull run. BlackRock’s ETF played well for Bitcoin, and the cryptocurrency market, and the company has more to offer, recently announcing its foray into the tokenized sector. On-chain funds could be a new growth category for asset managers.
Will Bitcoin cross $100,000 post-halving? It’s just a matter of time.
Lynn Martelli is an editor at Readability. She received her MFA in Creative Writing from Antioch University and has worked as an editor for over 10 years. Lynn has edited a wide variety of books, including fiction, non-fiction, memoirs, and more. In her free time, Lynn enjoys reading, writing, and spending time with her family and friends.
