The Bitcoin halving event, where the quantity of new Bitcoin issued every ten minutes gets halved, is expected this weekend. In previous occurrences, this milestone has typically resulted in a price increase for Bitcoin, although there are differing opinions on whether a similar situation will arise this time.
Bitcoin already achieved record highs above $73,000 last month, an unprecedented feat ahead of a halving event, yet the price has withdrawn slightly in recent weeks. At the time of the halving, Bitcoin miners' incentives and the rate of new Bitcoins issuance will be cut in half, following one of the founding regulations set by Bitcoin creator Satoshi Nakamoto.
Bitcoin mining, the process of verifying all transactions on the Bitcoin blockchain and minting new Bitcoins, rewards miners for the effort with a block subsidy and transaction fees. The subsidy, created from newly minted Bitcoin, historically constitutes the majority of the block reward, which was initially set at 50 Bitcoins at the 2009 launch. However, after each 210,000 blocks or roughly four years, the reward reduces, landing currently at 6.25 Bitcoins and expected to drop to 3.125 after this weekend's event.
That said, even though this halving schedule is publicly known, the unexpected 50% drop in the steady production of new Bitcoins could distort the cryptocurrency's supply and demand dynamics, leading to a new all-time high, as observed in the months post the previous three halving events.
However, not all analysts predict a price jump this time, citing reasons specific to this year's halving. They claim that Bitcoin's value has already peaked in this four-year cycle, consuming larger than forecasted demand from spot Bitcoin exchange-traded funds (ETFs). Deutsche Bank analysts argue the halving event is "partially priced in" and do not foresee significant price movements post-halving, while others express concerns over a less attractive crypto market amidst elevated Treasury yields.
Bitcoin experienced some pre-halving turbulence, with prices waning from multiple records set in March to a more defined downward trend since April 8, similar to patterns seen before 2016's halving that ultimately led to a leader price peak.
In this context, three types of stocks could face repercussions from the Bitcoin halving: miners, companies holding Bitcoin, and Bitcoin trading platforms. While an increase in Bitcoin's price could counterbalance the impact of fewer Bitcoin rewards, miners fate over the long term remains uncertain in light of the next halving cycle. Meanwhile, MicroStrategy's substantial 214,246 Bitcoin portfolio might influence its stock price if Bitcoin trends prevail.
Trade platforms like Coinbase and Robinhood might experience higher volumes if halving triggers volatility. However, analysts suggest that larger Bitcoin volume events might overshadow the halving's impact on these two trading platforms.