Priced In or Not, Bitcoin Halving Propels Meme Coins’ Value

April 24, 2024

Amid ongoing debates over whether the effects of the Bitcoin Halving were already reflected in its price, recent market trends confirm the event’s crucial role in driving the bullish sentiment observed across multiple cryptocurrencies. This historic reduction in Bitcoin mining rewards marks a significant milestone, influencing market dynamics and investor sentiment profoundly.

The cryptocurrency market saw an uptick as Bitcoin rose modestly at the start of the week following the network’s fourth halving on Friday. This pivotal event reduced the reward for mining Bitcoin transactions, influencing not just Bitcoin but the entire crypto spectrum.

Bitcoin faced a slight pullback immediately after the halving, but by the weekend the narrative shifted, with the cryptocurrency regaining strength and reclaiming the $65,000 mark. This recovery sets a backdrop of resilience and potential growth within the crypto market.

Analyst’s Take

Matteo Greco, a research analyst at Fineqia International, provided The Shib Daily insights into the typical responses after a halving event. “Following a halving event, it’s common to observe a short-term decrease in the total hashrate as miners adjust their operations,” Greco said. 

“The next BTC difficulty adjustment, scheduled for April 24 and occurring every two weeks, aims to maintain a consistent average block time despite fluctuations in the network’s hashrate. A decline in total hashrate post-halving shouldn’t be interpreted as a sign of stress within the mining industry but rather as a typical response to the event. Over time, the hashrate is expected to rebound as miners enhance efficiency and competition intensifies. A higher hashrate enhances network security, as the computational power required for a chain attack increases, making such attacks more costly,’ the Fineqia International research analyst added.

Meme Coins Take the Spotlight

As the cryptocurrency community commemorated the fourth halving of Bitcoin, a surprising surge was seen in the meme coin market. Enthusiasm peaked among traders who aggressively invested in top meme tokens as the week drew to a close. 

Notable advances were observed across various tokens: Shiba Inu (SHIB) experienced a significant boost in trading volume, reaching $1.193 billion in just 24 hours, which elevated its price by 2.23% to $0.000024. Similarly, meme coins like Bonk Inu and Floki Inu enjoyed substantial hikes, soaring up to 35% and 19%, respectively. Meanwhile, Dogecoin, often seen as the standard-bearer among meme coins, experienced a more modest rise of 4%.

The Economic Theory Behind Halving

Matt Hougan, Chief Investment Officer at BitwiseInvest and Co-founder of FutureProof_HQ, previously explained that while the concept of whether the Bitcoin halving is priced in or not is a matter of ongoing debate, there are complexities beyond a straightforward answer. According to the Efficient Markets Hypothesis (EMH), which states that asset prices reflect all available information, the halving event is well-known and therefore already factored into the current price of Bitcoin. 

However, Hougan also pointed out that the market cannot predict everything about the future, leaving room for potential market dynamics to unfold post-halving. Additionally, he discussed the impact of the halving on the ratio of forced to willing sellers, which could influence market behavior and potentially lead to a bullish response if future demand exceeds supply. Therefore, while the halving event may be considered “priced in” based on available information, there are nuances and uncertainties that could still impact Bitcoin’s price movement in the future.

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