The upcoming fourth reduction in the production of new Bitcoins has led to much discussion about potential large price increases. However, Glassnode, a data analysis company, urges caution and suggests that investors adjust their expectations according to past trends.
Approximately a week ago, the Bitcoin halving occurred, resulting in a decrease of 50% in the rate at which new Bitcoins are created, making the existing Bitcoins more scarce and valuable.
Glassnode Says Fourth Halving is Different
Historically, the process of halving, which is a key event in the Bitcoin economy where the reward for mining new blocks is cut in half, has influenced price trends. However, according to Glassnode, there are indications of decreasing returns and less severe market corrections as the market expands and more capital flows in.
According to Glassnode’s analysis, the second epoch experienced a remarkable price surge of over 5,300%, but also a significant maximum decline of 85%. In comparison, the fourth epoch showed more modest growth with a 569% increase and a drawdown of 77%. The report highlights that the previous three cycles leading up to the halving had comparable price gains, which ranged between around 200% and 300%.
In contrast to past occurrences, bitcoin has already exceeded its prior record-setting price before the upcoming halving. This is a unique development not witnessed in previous cycles. According to Glassnode’s analysis, investors currently hold substantial unrealized profits during this halving event. The MVRV Ratio reveals an average paper gain of +126% for these profits.
In a historic shift, the rate at which new bitcoins are created (0.83%) now trails behind the natural annual increase in the gold supply (approximately 2.3%). This distinguishes the fourth halving of bitcoin’s creation process from that of gold.
In terms of networking basics, the hash rate is persistently rising, suggesting more funds being poured into mining hardware. Despite miner revenues displaying a decreasing growth rate in US dollars, they have collectively expanded, surpassing the $3 billion mark in the previous four years.
In simpler terms, the amount of money invested in Bitcoin, represented by its realized cap, contributes to the current market value of around $1.3 trillion. This represents a substantial growth of 439% compared to the previous period.
Glassnode Co-Founders Predict Rebound to $72K
According to Glassnode’s analysis, Bitcoin’s transaction volume has surpassed $106 trillion in the past four years, demonstrating the network’s robust ability to process transactions despite market volatility and unfavorable news reports.
Currently, Glassnode’s co-founders have shared their perspective on bitcoin’s possible recovery in a recent article on X. They predict a potential rise to hit $72,000 and emphasize the significance of the 50-day Exponential Moving Average (EMA) at around $62,000 as a crucial support line.
Investors were also encouraged by experts to take advantage of decreases in Bitcoin’s price as potential purchases at favorable rates, particularly during the current period of price stabilization within the overall upward market trend for the cryptocurrency.
Based on information from CoinGecko, Bitcoin’s current price is at around $66,500. This is a small 0.2% rise in comparison to the previous day’s price. Meanwhile, there has been a more significant weekly growth of approximately 5.0%.
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2024-04-24 16:34